NZ house prices edge up in July; REINZ calls for looser LVR rules on sales slump
By Sophie Boot
Aug. 11 (BusinessDesk) - New Zealand house prices increased in July, however, the Real Estate Institute still wants first-home buyers carved out from mortgage lending restrictions in the face of shrinking sales numbers.
The REINZ house price index was unchanged in July from a month earlier and was up 1.2 percent from July 2016, the real estate agents group said. Excluding Auckland, house prices rose 7.5 percent from a year earlier, while in Auckland they were 2.1 percent lower.
Nationwide sales volumes dropped 25 percent last month compared to July 2016, with Waikato sales dropping 32 percent and Auckland sales down 31 percent. The national median house price increased 3.4 percent to $518,000 in July from last year, while the median number of days it took to sell a home rose to 35 days from 31 days.
Record migration and low interest rates have bolstered the country's housing market, prompting the central bank to clamp down on the level of high loan-to-value ratio mortgages in an effort to reduce the risk to the nation's financial stability.
In Auckland, the country's largest city where rising prices have made housing unaffordable for many, the median sales price dipped an annual 1.2 percent to $830,000, although REINZ chief executive Bindi Norwell said the city would "likely to be protected from significant price decreases in the short term" due to the housing shortage and population growth.
"The number of sales across New Zealand has dropped significantly in comparison to the same time last year," Norwell said. "A key reason for this is that the two biggest hurdles to purchasing a house right now are access to finance as the banks continue to tighten their lending criteria and LVR restrictions. This creates an intimidating barrier to entry to the real estate market, particularly for those saving for their first home."
"The LVR restrictions have done their job of slowing the market, but now it seems they are acting as a handbrake which is why REINZ is calling for LVRs to be reviewed for first time buyers," Norwell said.
On an index basis, Gisborne/Hawkes Bay saw the biggest price increases, up 17 percent from a year earlier. Prices in Northland rose 15 percent to hit a new high, with Manawatu/Whanganui prices also rising 15 percent to a new high.
Nationwide, the number of properties available for sale rose 7 percent compared with July last year, while in Auckland properties for sale jumped 49 percent.
More houses moved into the $500,000-to-$750,000 price bracket, with 27 percent sold for that in July compared to 24 percent last year. Fewer were sold for less than $500,000, at 47.8 percent compared to 49.4 percent a year earlier, and the proportion of houses selling for over $1 million dropped to 12.9 percent from 13.8 percent last July.