Falling market blamed on entry barriers

Median Bay of Plenty house prices have dropped slightly. Photo: Supplied.

A falling real estate market is being blamed on barriers to first home buyers by Real Estate Institute of NZ CEO Bindi Norwell.

 Properties selling across New Zealand in July fell by a quarter (24.5 per cent) when compared to the same time last year, and the number of properties sold in Auckland for the same period fell by 30.6 per cent.

“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,” says Bindi. “This creates an intimidating barrier to entry to the real estate market, particularly for those saving for their first home.”

The number of sales across New Zealand has dropped significantly in comparison to the same time last year, says Bindi.

From a national perspective, the drop in sales represents the lowest number of properties sold in a non-Christmas month (December/January) since August 2014.

 “No matter where we are in the country, agents tell us that there are a good number of buyers out there, but that these two issues are impacting both investors and first-time buyers alike,” says Bindi. “When you throw in an election, winter, school holidays and one of the wettest Julys on record, it's little wonder the number of properties sold last month fell so significantly.

“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,” says Bindi.

The latest REINZ House Price Index shows values are increasing overall. National values increased 7.5 per cent, but fell in Auckland by 1.2 per cent.

Median House Prices in the Bay of Plenty, Auckland, West coast and Canterbury all fell. In the Bay of Plenty the median price dropped 1.2 per cent to $489,000, Auckland 1.2 per cent to $830,000, West coast down 23.5 per cent to $195,000 and Canterbury down 2.3 per cent to $420,000. 

Four regions also experienced record median prices year-on-year – Northland up 23 per cent to $455,000, Hawke's Bay up 25.8 per cent to $400, 000, Nelson up 20.2 per cent to $493,000 and Otago up 15.3 per cent to $400,000.

“With the majority of the country experiencing price rises and four regions experiencing record prices, it shows that demand is still strong across significant portions of the country,” says Bindi.  “Most notably this growth is seen in provincial towns rather than the bigger cities - much of this can still be attributed to people looking to exit the bigger cities for more affordable and relaxed lifestyles.

“While the median house price for Auckland has fallen slightly, the housing shortage coupled with the increased population growth means the City of Sails is likely to be protected from significant price decreases in the short term.”

“Auckland is not short of properties available for sale, given that the number of properties available has increased by nearly half. The issue is purchasers being hamstrung by finance and LVR restrictions. However, in the lower South Island, listings are down making it even harder for investors and first-time buyers to compete for properties,” concludes Norwell.

The monthly REINZ residential sales reports are based on actual sales reported by real estate agents. These sales are taken as of the date that a transaction becomes unconditional, up to 5:00pm on the last business day of the month. Other surveys of the residential property market are based on information from Territorial Authorities regarding settlement and the receipt of documents by the relevant Territorial Authority from a solicitor. As such, this information involves a lag of four to six weeks before the sale is recorded.



3 Comments

Yes, but it helps...

Posted on 19-08-2017 22:43 | By GreertonBoy

The rich get richer... How it is set up, means that only the wealthy can buy houses (yes multiple houses) and those starting out, unless they are from a wealthy family, cant afford to even contemplate buying a house. This is good for the govt, that way, the poor have to rent from the wealthy home owners, who collect the tax from the rent for the govt... without necessarily having to pay tax themselves.... see, a perfect setup for all... the poor have a place to rent..... the govt gets lots of tax and everyone is happy... well, maybe not the poor who rent... but, who cares about them anyway... they are just the peasants anyway... the cash cows.... no less...

Housing market

Posted on 19-08-2017 16:50 | By phoenix

If a home-owner really want to sell their property, they need to reduce their price.increasing the ability to borrow more money, will only see house prices keep on rising. Real estate agents have had a field day over the last few years,so stop whining that the market has slowed down.Buyers would be better off if prices fell to meet the market.

Correct

Posted on 19-08-2017 11:02 | By MISS ADVENTURE

Silly decisions of teh Reserve Bank to increase the LVR makes it very hard fo first home buyer. Obvious many just dont have 20% deposit, even for a $600k AKL house that is $120k and then add costs. Who has got that kind of spare cash floating around. Add to that teh AML requirements and all is completely stupid.

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