NZ house sales drop 10% in July as supply continues to dwindle

Wednesday 10th August 2016

By Paul McBeth

Aug. 10 (BusinessDesk) - The volume of houses sold last month dropped 10 percent from a year earlier as the number of properties on the market continued to shrink, according to the Real Estate Institute of New Zealand.

There were 7,299 sales in July, 10 percent lower than the same month a year earlier, and down a seasonally adjusted 3.6 percent in the month. Inventory shrank by a third, though steady demand meant prices continued to rise in the month, with the median sale price of $505,000 up 8.6 percent from a year earlier, or a 1 percent seasonally adjusted increase from June.

"Sales volumes remain below previous periods as the continued shortage of supply impacts buyers who are struggling to find properties to buy," REINZ spokesman Bryan Thomson said in a statement. "We will watch market reaction with interest as the expected increase in listing numbers during the spring and summer selling period become available and the market assesses the impact of the recently announced LVR (loan to value ratio) rule changes, the approval or otherwise of the Auckland unitary plan and possible interest rate cut."

New Zealand's housing market is seen as posing a threat to the country's financial system with the cost of servicing increasingly large mortgages making the Reserve Bank uneasy about household balance sheets. Governor Graeme Wheeler signalled plans to introduce restrictions on highly-leveraged lending to property investors, something the banks adopted late last month.

One of the central bank's biggest concerns has been Auckland where a lack of housing coincided with a record net inflow of new migrants, pushing up prices faster than elsewhere. Today's data show the median Auckland sale price was $825,000 in July, up 12 percent from a year earlier, while sales volumes were down by about 20 percent at 2,520.

Prices gained the most in Central Otago Lakes, up 32 percent to $660,000, while volumes fell 12 percent to 129, followed by the Waikato/Bay of Plenty region, rising 26 percent to $450,000 from a year earlier, with a 14 percent fall in sales to 1,335.

Canterbury Westland posted the smallest increase in prices, rising 2.4 percent to $425,000 from a year earlier on a 2.3 percent decline in sales to 900.

(BusinessDesk)

BusinessDesk.co.nz

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