Housing: Bumper April for property sales as prices drop from March high

Last month saw the highest number of property sales for an April month in years, according to the latest figures from the Real Estate Institute of New Zealand (REINZ).

However, while it was a bumper April month, sales were down on March which REINZ says may reflect a "wait and see approach" from investors and first home buyers in the wake of changes to loan-to-value ratios and announcements from the Government.

There were 7218 properties sold last month nationally, the most for April in five years. It was particularly big for the West Coast, which had its strongest April in 15 years, and Canterbury, where sales hit a 14-year April high.

However, when ignoring April 2020 - when the country was in COVID-19 lockdown - Otago had its lowest April sales since 2008. Gisborne and Manawatu/Whanganui were also relatively quiet.

While 2021 marked a big April nationally, REINZ acting chief executive Wendy Alexander says sales are down on March for several reasons. 

"While in part this is what we expect to happen when moving from March to April, there is definitely a wait and see approach from a number of investors and also some first time buyers," she said on Thursday morning.

"Some of these falls in sales volumes are likely to be early signs of the LVRs slowing the market, some will be attributed to the changes announced on March 23 and some are likely to be the fact that we have the lowest level of inventory for an April month since records began."

After removing LVRs in April last year to promote cash flow during the COVID-19 pandemic, the Reserve Bank later announced they would return in an attempt to cool down the boiling housing market which went bananas over 2020. The Government also announced a range of measures in March to tilt the market towards first-home buyers and away from investors.

The national median price for a residential property in April was $810,000, down from a record-high in March of $826,300. The April figure is up 19.1 percent since April last year. 

Nine of 16 regions hit new records in April, including Auckland which jumped to $1.125 million from $1.12m in March. The City of Sails is up 21.6 percent since April 2020.

Other regions hitting new heights include Waikato, Gisborne, Manawatu/Whanganui, Taranaki, and Otago.

"As we predicted last month, the ongoing lack of supply continues to put upwards pressure on house prices," Alexander said.

"However, we have seen some regions start to show signs of prices easing and the rate of growth slowing down a little which will be welcome news to those looking to get on the property market. Additionally, it might be the first signs that the re-introduction of the LVRs is starting to have the desired effect."

But she was surprised by the jumps in some regions, like Auckland.

"As we head further into the cooler months of the year and the second tranche of LVRs comes into effect, we would expect to see further stabilisation of the market in the coming months – as long as we see a solid level of new listings come to the market."

Housing: Bumper April for property sales as prices drop from March high
Photo credit: REINZ.

The number of properties available for sale decreased 19.6 percent in April compared to the same month last year. Only Gisborne saw an uplift in inventory levels, while Nelson, West Coast and the Bay of Plenty saw the biggest drops. 

REINZ also reports that the median number of days to sell a property has fallen five days from 34 to 29 when compared to April last year. That's the lowest of any April since records began. Nearly a third of all property sales last month were by auction, a new record for April as well.