The Reserve Bank's contentious loan to value ratio (LVR)
on mortgage borrowings has seen the number of first-home buyers
in the market plummet during September, but separate surveys
indicate prices are still rising.
The Real Estate Institute of New Zealand released figures
yesterday showing an almost 20% gain on the number of houses
sold a year ago, to 6720, while the median national price,
compared with a year ago, rose $29,000 to $400,000.
Auckland and Canterbury accounted for 95% of the price
increase, with September house and section sales rising to
$3.41 billion from $2.62 billion last year.
Overall, Otago September house prices rose $10,000, or 4.2%,
to $245,000. The Central Otago Lakes area was down more than
$21,000, or 4.8%, in median price at $419,000. Queenstown
dropped 13%, or $75,750, to $500,000.
REINZ chief executive Helen O'Sullivan said the sales volumes
were ''strong'' in the lead-up to LVR's introduction and
ahead of expectations for this time of year.
BNZ chief economist Tony Alexander's monthly BNZ-REINZ
residential market survey said if the Reserve Bank expected
its LVR to have a substantial impact on house-price
expectations, then it would be ''very disappointed''.
The survey, of more than 400 real estate agents, said in
September 51% expected prices to rise, compared to 41% in
''Price rises are seen as continuing,'' Mr Alexander said.
The LVR applies to people wanting loans of more than 80% of
the asking price. Under the new rule, only 10% of a bank's
loan book can be exposed to these higher-risk loans.
The risk is in values tumbling in the future and banks being
left holding loans worth more than the devalued property.
Mr Alexander said the survey revealed ''a sharp decline in
first-home buyer presence'', a much smaller decline in
investor demand, and a barely noticeable impact on
perceptions of where prices were heading.
''Along with the collapse in first-home buyer presence has
come a sharp decline in perceptions of auction clearance
rates in Auckland to a net 10% negative from 16% positive in
September and 31% in August,'' Mr Alexander said.
He said the decline in first-home buyers would ''probably
not'' be sustained as they adjusted to the new rules, found
alternative finance sources or shifted their geographical
The responses overall had 16% of agents saying they were
seeing fewer people at open homes.
''This is a strong sign of cooling activity and the weakest
result on record,'' Mr Alexander said.
In Australia, the number of home loans approved in August
fell 3.9%, official figures show.
There were 49,912 approvals in the month, compared to 51,927
approvals in July.
Economists had expected the number of housing finance
commitments to fall 2.5% in August.
Total housing finance by value fell 1.2% in August,
seasonally adjusted, to $A23.8 billion ($NZ27 billion), the
Australian Bureau of Statistics said yesterday.