Strong turnover constrained by supply

The strong turnover of the prior month continued through August with 128 homes sold according to the latest REINZ data for Napier. Turnover during the past year is now 22% higher than the previous year, and over the past two months sales volumes are at levels last seen in April 2007.

Activity in the top half of the North Island is leading growth across the country as buyers look for more affordable property options outside major metropolitan centers.

First home buyers taking advantage of recent incentive improvements has help lift demand for homes up to the $350,000 cap which have improved by 19% during the past year. Investors are competing for these homes looking for better returns than banks or shares can currently offer.

A softening of lending constraints and further easing in interest rates is benefiting sellers in higher price brackets as well. In particular turnover between $350,000 and $600,000 has improved 25% over the past year.

A lack of property available for sale is limiting the scope of potential house sales in the months ahead. An audit of data from realestate.co.nz shows only 366 properties for sale in Napier in September 2015, which is 33% fewer than the same month a year ago.

Improved demand has had a positive effect on prices, which have stabilized. Quotable Value is reporting that prices have improved by 2.4% in Napier compared with the same period last year. QV’s Quarterly Price index shows that at current levels prices have returned to levels similar to the 2007/2008 market peak.

Well-presented properties in popular localities which are correctly priced are attracting excellent interest, often receiving multiple offers and selling for above average prices.

Although consumer confidence has eased this year, households do not appear to have been spooked as much as businesses by the drop in dairy prices and mounting uncertainty about global economic prospects. The Reserve Bank and the New Zealand dollar, have both responded to these challenges – with the Bank cutting the OCR further in September, and the dollar having depreciated 12% in the past three months.