The house price growth of 2021 is "receding" this year, the head of the Real Estate Institute of New Zealand (REINZ) says in the face of May data.
The organisation's latest monthly property report revealed median house prices were down month-on-month - 4.0% nationally since April.
REINZ chief executive Jen Baird said a marginal dip in median property prices between April and May are normally seen, but there had been a greater drop than expected after looking at seasonally adjusted figures. They showed a 3.1% decrease.
Baird remarked that thanks to tighter credit conditions, higher mortgage rates and increased housing supply, sales were taking longer to complete and properties were staying on the market longer.
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She said the May data also showed upward pressure on prices is easing.
"Over the course of 2021, house prices soared, largely due to supply not being able to meet demand, supported by historically low interest rates and access to capital," Baird said.
"Measures introduced by the Government - including the reintroduction of LVRs and changes to the Credit Contracts and Consumer Finance Act (CCCFA) - and the Reserve Bank OCR hikes have affected market dynamics, and we are now seeing the reverse playout. The price growth of last year is receding."
The May data also noted there had been an annual decrease in sales nationwide. They had increased month-on-month. Auckland, Waikato, Bay of Plenty and the West Coast were singled out for the greatest annual percentage decrease.
Nelson, meanwhile, was singled out as the only region to see an annual increase in sales - 4.5%.
Looking at Auckland, the annual median house price had fallen by 2.2% to $1,125,000. Looking at month-on-month, this was 3.9%.
REINZ said the last time the annual median price dropped in Auckland was October 2019.
Everywhere else - Northland, Waikato, Bay of Plenty, Gisborne, Hawke's Bay, Manawatū/Whanganui, Wellington, Nelson, Tasman, Marlborough, Canterbury, West Coast, Otago and Southland - was up or observed no change in annual median price.
The May data also showed supply outweighed demand - up 77.6% compared to the same time last year.
Properties were also taking longer to sell - 43 days on average. This was the highest median days to sell since February 2019, REINZ noted (excluding the 2020 lockdown).
The percentage of sales by auction was also down to 606 (10.9% of overall sales compared to 28.2% this time last year).
"It's self-fulfilling; more supply, more choice, less urgency, slower sales. The impact is that there is less upward pressure on prices," Baird reflected.
She said more interest from first home buyers hasn't transferred to sales yet.
"With further increases to interest rates to counter inflation expected and global economic uncertainty and supply chain disruption caused by the conflict in Ukraine, we may see market activity settle this winter at its new, slightly slower, pace," Baird said.
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