NZ house prices gain 11% in October, driven by sales of higher value homes

Monday 14th November 2016

New Zealand's median house price increased 11 percent in October, as tougher lending rules failed to dampen sales of higher value properties, according to the Real Estate Institute of New Zealand.

The national median house price rose to $510,000 in October from $460,000 a year earlier, the institute said. The price weakened from the September median level of $515,000. There were 6,727 national sales in October, down 14 percent from a year earlier and 9 percent lower than September.

Concern about New Zealand's bubbling housing market has prompted policymakers at the Reserve Bank to introduce tighter restrictions for highly-leveraged lending. Today's report shows stricter conditions around loan-to-value ratio lending is having a bigger impact on lower-priced properties, with sales of homes under $400,000 accounting for just 35 percent of sales in October, from 41 percent a year ago, while sales of properties over $1 million accounting for 15 percent of the total, up from 10 percent.

"Our data suggests that the impact of the revised LVR rules is having more of an effect on lower-priced sales compared to higher-priced sales, with a surge in the percentage of sales over $1 million and a noticeable decline in the number of sales below $400,000 compared to 12 months ago," said institute spokesman Bryan Thomson. "Some of this change may be reflective of the overall uplift in prices over the past year as the market for higher-priced properties is continuing as normal, but the market for lower-priced properties is becoming more difficult for both buyers and sellers."

Thomson said the normal 'spring bounce' in listing numbers has so far been "quite weak" this year.

"One possible reason for this is that the revised rules could be making it harder for people to know whether to sell, as they wonder if there are buyers about, so they hold their properties back from the market," he said. "This could have the result that we’re seeing, which is that supply falls but the demand is still there, so prices keep rising.”

Prices hit a new record in Auckland, up 16 percent to $868,000 from the year earlier. Other regions to hit new records were Northland, up 11 percent to $399,000; Waikato/Bay of Plenty, up 21 percent to $460,750; and Southland up 13 percent to $225,000. Prices gained the most in Central Otago Lakes, up 42 percent to $659,500.

The number of properties available for sale nationwide shrank by 24 percent compared with October last year. Wellington has the fewest properties for sale with an estimated six weeks of supply.

BusinessDesk.co.nz

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