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Auckland house sales weren't constrained by tougher Reserve Bank rules in October, Barfoot says

Tuesday 5th November 2013

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Auckland house sales are showing no early signs of being restrained by Reserve Bank restrictions on high loan-to-value home loans introduced last month, according to realtor Barfoot & Thompson.

Sales rose 8.9 percent to 1,203 in October from September, the firm said in a statement. The average price rose 0.8 percent to $663,123 while the median price declined 1.7 percent to $590,000.

From Oct. 1, the Reserve Bank has required banks to restrict mortgage lending to borrowers with less than a 20 percent deposit to no more than 10 percent of their total lending. The central bank is concerned that a house price bubble, driven by housing shortages in Auckland and Christchurch, could cause financial instability.

"It could be up to six months before the market feels the full impact of the new mortgage lending regime, and certainly one month's experience is not enough to make judgements about the success or otherwise of the initiative," Peter Thompson, managing director of Barfoot & Thompson, said in the statement.

Sales recorded in October would have been kicked off in August or September, Thompson said. The New Zealand market is in its peak sales period as people seek to finalise their property transactions ahead of the summer holiday break, he said.

"The stand out feature of October's trading was that choice increased significantly," Thompson said.

Barfoot's new listings increased 23 percent to 2,016 in October, the first time in more than five years that new listings have exceeded 2,000. At the end of the month, the firm had 14 percent more listings on its books than at the end of September.

The company sold 21 percent more homes under $500,000 in October than during the previous month, suggesting more first home buyers may have been entering the market, Thompson said.

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