NZ:New Lending Rules Start to Bite Property Market

Tuesday, March 11th, 2014
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New Zealand property sales fell 7.6 per cent in February from a year earlier, which may indicate restrictions on high-debt lending are hindering first-home buyers, according to the industry body representing real estate agents.

Some 6,125 properties were sold by real estate agents in February, down from 6,632 the same month last year, the Real Estate Institute of New Zealand said.

The median price increased 8.6 per cent to $415,000 from the year earlier, possibly reflecting an increase in the sale of higher priced properties as the number of sales worth $600,000 to $1 million rose 9.2 per cent, the institute said. Sales below $400,000 tumbled almost 18 per cent.

House sale volumes have been dented by the Reserve Bank’s imposition of restrictions on high-debt lending last October on concern an overheated housing market, driven by shortages in Auckland and Christchurch, could threaten financial stability.

“The results for February show further evidence that the national sales volume trend is easing, with only two of 12 regions showing an increase in sales volumes compared to February 2013,” said institute chief executive Helen O’Sullivan.

“Some regions are reporting increasing interest from first-home buyers while others report little in the way of activity.”

Property sales volumes increased 29.8 per cent from January, reflecting a bounce following the summer holiday period. This year’s increase lags the 10-year average gain of 33.5 per cent between January and February, the institute said.

The stratified house price index, which aims to smooth out peaks and troughs and is the preferred measure used by the Reserve Bank, is 8.2 per cent higher in February than the year earlier month.

The Auckland index rose 16.9 per cent to a record, while the Christchurch index gained 6.8 per cent.

The increase in prices “may be evidence of more activity taking place in higher price brackets, beyond the reach of most first-home buyers”, Ms O’Sullivan said.

It took two days longer to sell a house in February from the year earlier month. The total value of residential sales, including sections rose to $3.17 billion in February, from $3.15 billion a year earlier.

By Tina Morrison
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