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.