Conveyancers have benefitted from the recent boom in New Zealand’s housing market, but the heat may be coming out of property, according to recent data from the Real Estate Institute of New Zealand (REINZ).

Between January and November of this year, REINZ reported a total of 83,899 residential sales, up 0.9% on the 83,138 sales recorded in the same period last year. However, the data shows that house sales have slipped in the previously rampant Auckland market, where sales volumes are down 11.5% compared to the corresponding period in 2015.

The number of houses on the market nationally is also in decline, with an 8% fall in properties available for sale in November compared to the same month last year, according to REINZ’s data.

Time out

Westpac economist Sarah Drought says the housing market has “taken a breather in recent months”, with housing turnover down sharply since the introduction of tighter lending restrictions. These restrictions mean that property investors now need a 40% deposit, while owner-occupiers need a 20% deposit.

“While we expect this dampening effect from tighter LVRs (loan-to-value ratios) to be temporary, mortgage rates have been edging up over the past few months and this should help keep the heat out of the housing market, even as demand factors like strong population growth remain prominent.” Ms Drought says.

The LVR restrictions have also impacted buyer sentiment, with the number of New Zealanders who think now is a good time to buy property falling to an historical low in the latest ASB Housing Confidence survey.  

“The LVR restrictions were likely to have made respondents more wary about house price increases. At the same time, the 40% investor deposit requirement could be making respondents decide now is not a good time to buy, especially outside of Auckland,” say ASB economists.

Residential Dwelling Sales By Region, January – November inclusive

Source: REINZ