First-home buyer numbers appear to be down. Pictured, Caversham in Dunedin. Photo by Gerard O'Brien.
The Reserve Bank's contentious loan to value ratio (LVR)
restrictions on bank lending appear to be biting into New
Zealand home sales, especially in the targeted bracket of
In the both the national entry level $400,000 bracket, and
Dunedin's $300,000 bracket, sales are down markedly.
Overall national home sales in December- mainly in the lower
$400,000 bracket - continued to decline, while the national
median price again struck a new high, of $427,000.
There were 5688 homes sold in December, a 1.1% decline on a
year ago, but compared to November sales numbers were down
18.3%, Real Estate Institute of New Zealand (REINZ) chief
executive Helen O'Sullivan said.
Sales of homes below $400,000 in November were down 19% on a
year earlier, and for the month of December, they were down
14.4% from a year earlier.
''This may be indicative of fewer sales in the lower price
[$400,000] brackets since the imposition of the [Reserve
Bank's] loan to value ratio restrictions, and a resulting
relative uplift in the median price on some regions,'' Ms
REINZ Otago spokeswoman Liz Nidd said in December 2012 64% of
house sales were in the $300,000-or-less range, but last
month that had fallen to 51%.
''There are less first-home buyers around,'' she said.
The Reserve Bank restricts mortgage lenders to having just
10% of their overall mortgage portfolio lent to people who
have less than a 20% deposit.
Ms Nidd said historically a ''bulge'' of new listings was
expected in Dunedin by early February, once parents had got
children back to school and turned their attention to selling
the family home.
Ms Nidd said the decline of $300,000 sales altered Dunedin's
overall median price, which rose from $278,500 in November to
She noted a massive increase in Dunedin section sales, from
14 and eight in October and November respectively, to 54 in
December, but 40 of those were a Gladstone Rd subdivision
Overall Otago sales were down from 231 a year ago to 212,
while the median price for December rose 2.2% from $247,500
For the separate Central Otago Lakes region, sales numbers
increased slightly from 103 to 110 for December and the
median price rose from $450,000 to $461,500.
Queenstown had a sales decline from 55 to 52 for December
anda larger 9.6% price decline, from $568,000 a year ago to
Westpac economist Dominick Stephens said there was '' now no
doubt'' that New Zealand's housing market was slowing.
''The slowdown has hit low-price houses especially hard,
indicating that the Reserve Bank's mortgage lending
restrictions are having an impact, as are rising mortgage
rates,'' Mr Stephens said.
House prices tended to follow sales, with a lag of a few
months, and Mr Stephens expected house price inflation to
''begin cooling a month or two from now''.
'' We are forecasting 6.5% house price inflation for 2014,
down from almost 10% in 2013,'' he said.
The number of house sales per month fell 11% during the three
months to December.
In seasonally adjusted terms, it was the sharpest decline in
house sales since 2009.
''Lower turnover is one classic indicator of a market
slowdown. It seems sellers are reluctant to put their houses
on the market in the current uncertain environment,'' Mr
ASB economist Daniel Smith said sales volumes dropped sharply
''So sales are still down from where they were before the LVR
restrictions came into effect. That suggests some impact on
demand,'' he said.