Properties are taking longer to sell and prices are struggling to stabilise in the wake of COVID-19, a new property report shows.
According to a Real Estate Institute of New Zealand (REINZ) May market confidence report, the nationwide median house price dropped $36,000 during the month, ending at $629,500, a drop of 9 percent between April and May. But compared to May 2019, it was 7 percent higher. Record median prices were achieved in three out of 16 regions: Waikato ($598,000), Taranaki ($426,000), and Tasman ($701,500).
Figures for the last week of May show properties took 35 percent longer to sell than a typical May month, and sales volumes were around 19 percent lower.
The number of days properties took to sell increased over the month, starting at 48 days and closing at 60 days. The region with the highest median number of days to sell was Gisborne at 81 days, for the week ending May 24. The region with the lowest number of days to sell was the West Coast, with a median of 21 days for the week ending May 17.
"Based on May data over the last three years, we'd expect median days to sell of around 39 days - we still have some way to go before this metric starts to return to a 'normal' level, the report said.
The number of properties sold jumped from 355 in the first week of May to 1372 in the final week. By comparison, historical May data shows that the number of properties sold in a typical week would be around 1700.
Median sales price compared to valuation
The report also recorded the median sales price relative to the property capital value (CV). For example, for a CV of $500,000 and a selling price of $550,000, the ratio is 1.10 (10 percent above CV).
During the month, the median sales price to valuation ratio fluctuated between 1.07 and 1.13.
"Overall, the metric is starting to show signs of improvement: good news for those selling but less welcome news for first-home buyers, investors and those hoping for a post-COVID bargain," the report said.
Throughout the month, Auckland's sales price to valuation ratio was flat, starting at 1.02 and finishing at 1.05. Gisborne's ratio was the highest, ending the month at 1.78, meaning the median ratio (percentage difference) of sale price to CV was 78 percent.
Sales by auction
The percentage of properties sold by auction increased during the month, finishing at 9.2 percent of all sales. Auctions were used in 7.1 percent of nationwide sales across the month, down from 10.2 percent in May 2019.
REINZ chief executive Bindi Norwell said that May figures show the number of property sales had increased following COVID-19 lockdown, and price-to-valuation ratios had lifted.
"The sales price-to-valuation ratio saw a good uplift during May and the percentage of auctions steadily increased throughout the month and is now just three percentage points behind where we were at this time last year."
However, the median number of days properties took to sell increased and Norwell said there was still "volatility" in pricing "as the market tries to find its new price point".
Reserve Bank data showed that in May lending to all borrowers increased by 57.1 percent compared to April, but was 33.3 percent below May last year.
"Reflecting feedback REINZ has heard from agents around the country, lending to first-time buyers has been more favourable than to investors, with an uplift of 65.5 percent and 59.5 percent respectively, compared to April's lending data," Norwell said.
Many homeowners financially affected by COVID-19 were still on the six-month mortgage holiday (suspension) and many business owners had taken the eight-week wage subsidy extension, helping to bolster rent and mortgage payments.
"It's too soon to make any calls… to use a running analogy, the finish line isn't quite in sight just yet," Norwell said.