Softening in New Zealand's housing market shouldn't be a cause for alarm, BNZ says as the latest round of property figures showed a drop in prices and sales.
“Changes in property prices, particularly in Auckland, generate news stories like few other topics," says BNZ's retail network general manager Logan Munro.
“The fact remains that the vast majority of New Zealanders buy houses as homes to live in and intend to hold onto them for many years. The unsurprising fluctuations in the paper value of what will most likely be their biggest asset – won’t have a material impact on their lives."
REINZ figures released today showed the year ended on a slow note, with the lowest number of residential properties sold for the month of December for seven years.
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The data showed a 13 per cent annual fall in national house sale numbers, from 6,117 in December 2017 to 5,330 last month.
Auckland was particularly hard-hit by low sales last month, with a 24 percent decline between December 2017 when 1765 places were sold, and last month when just 1336 places were sold.
December-to-December sales volumes fell in Taranaki 23 percent, Wellington 16 percent, Otago 14 per cent and Southland 13 percent.
According to REINZ, New Zealand's national median house sale price rose 1.5 per cent from December to December to reach $560,000 and Auckland's median rose 0.2 per cent to $862,000.
Data from OneRoof/Valocity released earlier in the week told a similar story, with its figures showing the median sales price for New Zealand hitting $530,000 in the period leading up to the Christmas holidays - up 2.9 percent on the year before.
Mr Munro says: “The small softening of house prices in Auckland is what we’d expect to see in a stable, mature housing market based on those sound banking practises. After all, Auckland prices have been flat since 2016 and we shouldn’t be surprised if there are more fluctuations to come.
“However, strong employment numbers, population growth, easing of LVR restrictions and low interest rates support a solid national housing market with New Zealanders keen to buy homes."
He adds: "The government and our regulators - the Reserve Bank and the Financial Markets Authority - have taken a responsible and effective approach to managing the housing market. The relaxing of the loan-to-value ratios at the start of this month will allow new first-time buyers and investors into the market and will likely help drive the market in the early part of the year."
In November, Reserve Bank Governor Adrian Orr commented that both mortgage credit growth and house price inflation had eased to more sustainable rates.
Banks are now allowed to lend 20 per cent of their new loans to owner-occupiers with a deposit of less than 20 percent.
That is up from the previous level of 15 percent.
Mr Munro says: “We’ve seen good, sustainable growth in our home lending. The RBNZ end of year figures for new residential mortgage borrowing show new lending in November was $6.2 billion, up $1 billion on November 2017. It was also up from $5.5 billion on the previous month (October) and up from $4.8 billion in September.
“And the market’s now possibly more attractive for first home buyers too. While the market overall has been relatively flat the share of new lending to first home buyers is increasing (16.5 percent in November 2018 compared to 14.1 percent in November 2016) and decreasing for investors (17.5 percent in November 2018 down from 23.7 percent in November 2016).
OneRoof editor Owen Vaughan said that whilst the recent round of figures, from OneRoof/Valocity, QV-CoreLogic and REINZ, indicate future upsets in the market, the major factors determining prices are still sound: constrained supply, strong demand and historically low interest rates.
OneRoof/Valocity figures showed prices in the country's two biggest housing markets - Auckland and Christchurch - continued to plateau. Auckland's median sale price was down 5.5 percent on the previous year, to $825,000, while Christchurch's median price of $438,000 was marginally up on the same period a year ago.
Also showing marginal growth were Tauranga (up 1.4 percent to $635,000) and Hamilton (up 1.1 percent to $542,000).
Prices in Wellington continued to climb steadily (up 9.2 percent to $630,000), driven by tight supply in the city's market, as did prices in Hawke's Bay (up 7.8 percent), Gisborne (up 8.5 percent) and Dunedin (up 11.8 percent), although growth in these markets seems to be mostly fuelled by their attractive price points.
