House price inflation edged marginally higher in May, suggesting the government's decision in April to shelve a capital gains tax and the Reserve Bank's decision to cut interest rates early in May have started to take effect.
The latest Real Estate Institute's house price index shows house prices across the country rose 0.2 per cent in May from April and were 1.8 per cent higher than a year earlier, faster than the 1.3 per cent annual pace in April.
That was entirely due to annual house price deflation in Auckland easing to 3.3 per cent from 4.4 per cent in April. Prices excluding Auckland rose 6.5 per cent from a year earlier, down from the 6.7 per cent in April.
RBNZ cut its official cash rate by 25 basis points to 1.5 per cent on May 8.
However, other indicators suggest the market remains somewhat sluggish. The number of houses sold across the country fell 7.8 per cent to 7,263 compared with sales in May last year with Auckland sales down 21.8 per cent to 2,462.
And the number of days it took to sell a house in May stretched by three days to 41 nationally and by five days to 45 in Auckland compared with May last year.
Nevertheless, REINZ chief executive Bindi Norwell sees a silver lining: "While the number of properties sold across the country was lower than the same time last year, it's actually the highest number of properties sold in 2019 so far.
"However, given new listings have been down across the country for six of the last seven months now when compared to the same time last year, it's not entirely surprising that the number of properties sold is down on the same time last year," Norwell says.
The house price index was developed by the Reserve Bank to smooth out greater or fewer numbers of cheap or expensive houses being sold in any month and to take into account the size of houses being sold to reach like-for-like numbers.
But REINZ continues to headline its own median house prices, which rose 3.2 per cent in May from the same month last year nationwide and by 1.2 per cent in Auckland.
The discrepancy between that and the index's 1.8 per cent annual increase reflects differences in the types of houses sold and their prices.
The number of homes sold for less than $500,000 across the country fell from 42.3 per cent of total sales in May last year to 39.7 per cent in May this year while the number of properties sold for between $500,000 and $750,000 rose to 31 per cent of the total from 28.5 per cent last May.
Nevertheless, based on median prices, REINZ identifies Gisborne house prices as the country's hot spot. "Gisborne saw a new record median price, increasing by a staggering 54.4 per cent year-on-year" it says, and on this basis claims "Gisborne house prices rose $2,645 a day in May."
However, the house price sub-index for Gisborne and Hawkes Bay – so on a like-for-like basis – shows prices in those regions rose 0.5 per cent in May from April and were up 9.5 per cent from a year earlier.