House sales fall for fifth consecutive month; first-home buyers lift market share

Liam Dann and Tamsyn Parker discuss what could be New Zealand's biggest property reset in decades.

Why Auckland’s economic recovery seems continually out of reach

House sale volumes continued to fall in May, marking the fifth consecutive month of declines compared with last year.

First-home buyers are taking advantage, their market share rising this year from 25.8% to 27.7%.

Cotality research out today said property sales activity was down again in May, the fifth fall in a row when compared with the same month last year.

During this year’s first five months, 36,152 properties were sold, down 4.7% on the same period last year.

Even though the flow of new listings also eased, the level of choice for buyers is high and this is keeping a lid on values, Cotality found.

Five months of national sales volume declines:

The Cotality Home Value Index was flat in May, still -0.6% below a year ago.

“Of course, this is presenting favourable conditions for first home buyers, who continue to buck the wider caution being seen from other buyer groups,” Cotality said today.

Favourable buying conditions, access to KiwiSaver for at least part of the deposit and the availability of low-deposit mortgages were supportive factors for first-home buyers.

Nationally, house values are down 17% from the peak of the market earlier this decade.

Cotality's Kelvin Davidson said the current market state was "not a collapse". Photo / Peter Meecham

Kelvin Davidson, Cotality NZ’s chief property economist, said: “I’d sum these falls up as being notable, but it’s not a collapse – the level is still fairly normal, but certainly a more sluggish start to the year than we were anticipating."

Liam Dann of the Herald has calculated that in inflation-adjusted terms, Auckland and Wellington house prices fell 35.5% and 40% since the market peak this decade.

New Zealand’s current property downturn, already one of the deepest in our modern history, is on its way to being the longest, Dann said.

This country is four-and-a-half years into the slump.

Herne Bay in Auckland is one of the country's highest-priced areas. Photo / Chris Tarpey

This month, Westpac senior economist Satish Ranchhod found more than a quarter of a trillion dollars had been wiped off Auckland and Wellington housing values.

He calculated $271 billion as the reduced value in the two cities’ values since the market peak.

The $271b is calculated as the difference in the collective value of all the homes in the two cities since the peak of the market about four-and-a-half years ago to May, based on Quotable Value (QV) figures.

Our economy, by the numbers

Source: Cotality

Anne Gibson has been the Herald’s property editor for 26 years, written books and covered property extensively here and overseas.