New Zealand Home Sales Cool, Prices Down 8% From November

By Stephen Wright

WELLINGTON, New Zealand–Home sales declined in New Zealand in June as the moderation in prices from last year’s stimulus-fueled peak instilled caution in buyers, while sellers hoped to preserve their recent rapid capital gains.

The number of homes sold in June fell about 38% from a year earlier to 4,721 dwellings and was down 17% from May. Median days to sell increased to 44 compared with 31 in June last year–another sign of a cooling market.

The national median sale price for June increased from May and from a year earlier, but the annual rate of increase was subdued compared with 30% gains in 2021, according to Real Estate Institute of New Zealand figures released Wednesday.

“There is much more negotiation happening in the market today,” said the real estate institute’s chief executive Jen Baird. “Buyers are more cautious of potential price declines after they have purchased, and vendors understandably want the best prices possible in an uncertain market.”

New Zealand home prices increased by about 45% over 2020 and 2021, spurred by expansive fiscal and monetary stimulus in response to the Covid-19 pandemic, and a longstanding housing shortage.

Price increases have cooled since late last year after the central bank tightening lending rules and raised interest rates. Changes to consumer credit regulations that made it more difficult to get finance, and the government’s removal of tax advantages for property investors, also blunted demand.

The national median sale price of 850,000 New Zealand dollars ($521,000) in June was 4.2% higher than a year earlier and 1.2% higher than May. June’s median price is down 8.1% from its record high of NZ$925,000 in November last year.

“As the market stabilises, and the high growth we saw through 2021 dissipates, downward pressure on prices may improve affordability,” said Ms. Baird. “However, this is balanced with higher mortgage costs and wider economic headwinds that may continue to temper people’s appetite for entering the market–as a buyer or seller.”

Write to Stephen Wright at [email protected]