Tuesday 12th November 2013
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New Zealand's median house price rose 1.9 percent to a record in October, although sale volumes were dented as Reserve Bank lending restrictions began to bite.
The median sale price rose $7,525 to a record $407,525 in October from September, and the price is 7.2 percent ahead of the year earlier month, according to the Real Estate Institute of New Zealand. The number of houses sold last month rose 0.9 percent to 6,778 from September, up 2.1 percent from the same month in 2012. On a seasonally adjusted basis, sales volumes fell 4.1 percent.
The Reserve Bank on Oct. 1 introduced loan to value restrictions on mortgage lending in an attempt to cool a bubbling housing market that could threaten financial stability and push interest rates higher. The full effect on prices may not show up in the median price for a few months as buyers with bank pre-approvals make purchases and the market adjusts to the new conditions, the institute said today.
"Real estate sales volumes eased back in October following the introduction by the Reserve Bank of restrictions on high LVR lending," the institute's chief executive Helen O'Sullivan said in a statement. "Comments by agents from around the country indicate heightened levels of uncertainty for both purchasers and vendors about the impact of these changes, which is causing a number of prospective buyers and sellers to hold off from committing to the market until they are more comfortable."
Volumes typically change more quickly than prices, and volumes are lower than expected for this time of year, O'Sullivan said.
New Zealand's property market is being driven by a lack of supply in an expanding Auckland and in Christchurch, which is being rebuilt following a series of earthquakes. Auckland, Canterbury/Westland and Waikato/Bay of Plenty regions reached new record high median prices in October, the institute said.
In Auckland, the median price rose 2.1 percent from September to $582,000, up 9.8 percent from the year earlier month. Sales volumes fell 3 percent from September, although they increased 1.6 percent from October 2012.
"The Auckland region remains the strongest housing market in the country," O'Sullivan said. "The trend in the median price continues to improve, with the trend in sales volume moving back to improving."
In the Canterbury/Westland region, the median price rose 1.3 percent from September to $380,000, up 10.8 percent from the year earlier month. Sales volumes rose 10 percent from September, and increased 13 percent from October 2012.
The LVR restrictions are having an effect, with attendances at some open homes down as much as 50 percent, according to the institute's regional director Tony McPherson.
For Waikato/Bay of Plenty, the median rose 3.1 percent from September to $335,000 as volumes slipped 4 percent.
"There has been a noticeable fall off in interest from first-home buyers, with investors taking advantage of less competition to acquire properties," according to the institute's regional director Philip Searle.
In the Manawatu/Wanganui region, the median price slipped 5.4 percent to $215,000 as sales volumes increased 10 percent. The LVR restrictions led to fewer first home buyers in the market and uncertainty stopped sellers from listing their properties, meaning a traditional spring surge in listings hadn't eventuated, O'Sullivan said.
Wellington's median price rose 3.8 percent to $405,000 as volumes increased 5 percent. Otago's median price gained 2 percent to $250,000 as volumes rose 32 percent. Southland's median price fell 5.1 percent to $179,750 as volumes declined 6.2 percent.
The REINZ Stratified Median Housing Price Index, which strips out peaks and troughs in housing information, rose 1.6 to a record 3,839.8 in October from September, and was up 9.9 percent from October last year.
The number of days to sell a house was unchanged at 31 in October, compared with September.
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