House prices up in July as buyers get in ahead of lending restrictions
By Tina Morrison
Aug 12 (BusinessDesk) – New Zealand house prices rose in July as more houses changed hands, suggesting first-home buyers
are trying to secure properties ahead of possible Reserve Bank restrictions on buyers with low deposits.
The median house price rose 6.6 percent to $385,000 in July from the year earlier month, with all 12 regions posting an
increase, according to the Real Estate Institute of New Zealand. Some 6,777 dwellings changed hands, up 15 percent from
the year earlier, with nine regions recording an increase, the institute said.
The nation’s central bank is expected to raise the benchmark interest rate from a record low 2.5 percent next year in
part to contain the housing market in Auckland, where a supply shortage has driven up prices, and Christchurch, which is
being rebuilt following a series of earthquakes.
The strong property market figures for July come as the central bank mulls the use of new macro-prudential tools to
restrict the volume of low equity mortgages on concern pressure in the housing market poses a risk to financial
stability.
“It is the most active winter the residential real estate market has seen for a while, with the volume of sales higher
than would normally be expected for this time of year,” Institute chief executive Helen O’Sullivan said in a statement.
House sales were at a six year high for the month of July.
“Reports from agents around the country suggest that first home buyers are moving quickly to secure properties ahead of
any move by the Reserve Bank to impose lending restrictions on buyers with lower deposits.”
July is usually one of the quietest months for real estate but the normal winter slowdown hasn’t happened this year, and
despite school holidays occurring in the middle of the month, O’Sullivan said.
Compared with June, sales volumes in July were 11 percent ahead while the median price slipped 2.3 percent, the
institute said.
To counter the impact of pending Reserve Bank restrictions, the National Party at the weekend announced first-home
buyers will qualify for government assistance under the KiwiSaver first-home-deposit subsidy and Welcome Home Loan
mortgage insurance scheme.
“The issue of housing availability remains a key for Auckland and Canterbury, but this is also now being seen in other
parts of the country,” the institute’s O’Sullivan said.
Otago recorded a new record median price of $266,778, the institute said. The Nelson/Marlborough region recorded the
largest increase in median price from the year earlier, up 15 percent, followed by Central Otago Lakes up 14 percent and
Taranaki up 13 percent.
The REINZ Stratified Median Housing Price Index, the Reserve Bank’s preferred measure that strips out distortions in the
data, is 8.6 percent higher than July 2012 and eased 0.5 percent compared to June. On the stratified index basis,
Auckland rose 14 percent from the year earlier, Christchurch rose 5.4 percent while Wellington gained 3.7 percent.
(BusinessDesk)