New Zealand house price inflation slowed to a crawl in June as the number of properties changing hands dried up, and a flood of new homes came to market.
The Real Estate Institute of New Zealand's (REINZ) house price index rose just 0.7% in June from a year earlier, slowing from a 3.7% pace in May, while the volume of properties sold sank 38.1% to 4,721.
Kiwibank senior economist Jeremy Couchman said the latest REINZ data painted a similar picture of the housing market in recent months, with house sales taking a “large tumble” and experiencing the largest monthly fall so far this year.
“The 4,721 sales recorded by REINZ were in fact the lowest for a June month since 2010,” he said in a note.
The property market has been coming off the boil its peak in November, when cheap finance underpinned an already overheated market, and before short-lived credit conditions sapped banks' appetite to lend.
REINZ chief executive Jen Baird said the rapid increases in house prices seen through 2021 were dissipating, and cheaper properties may make housing more affordable.
The national median sale price was up 4.2% at $850,000.
Baird said housing affordability remained an issue for many buyers. Tighter lending restrictions, higher interest rates and concerns over inflation were making buyers hesitant.
“There is much more negotiation happening in the market today as buyers are more cautious of potential price declines after they have purchased,” she said.
Across the country, 565 properties were sold by auction in June but only represented 12% of overall sales compared to 26.3% in the month a year earlier.
Excluding Auckland, 9.1% of properties across NZ were sold by auction in June, compared to 17.5% a year earlier.
Baird said Canterbury had the highest percentage of monthly sales by auction at 23.4% – still down from 28% in June 2021.
Gisborne had its smallest monthly proportion of properties sold at auction since 2015 at 19.2%.
In Auckland, the percentage of sales by auction was 17.5%, compared to 41% last year, Baird said.
Wellington's property market remained the weakest region, with the house price index falling 12.2% in June from a year earlier.
It's been in the bottom two spots for the past eight months. Auckland's annual house price index was down a more modest 1.7%.
ANZ senior economist Miles Workman said June’s monthly decline was a little less than he’d expected but the data showed the market was still softening.
“We think smaller declines are a story of timing, rather than magnitude,” he said.