House sales drop 20% in April as central bank moves bite
New Zealand house sales fell 20 percent in April from a year earlier, extending a decline in sales of cheaper property as the Reserve Bank's restrictions on low-equity mortgages and interest rate hikes weigh on buyers.
The number of houses sold by real estate agents fell to 5,670 in April, from 7,104 in the same month last year, according to the Real Estate Institute of New Zealand. The number of properties sold below $400,000 slid 32 percent to 2,497, accounting for 44 percent of all turnover compared to 51.4 percent a year earlier.
Sales of houses between $400,000 and $600,000 fell 14.3 percent to 1,557 as did sales of houses between $600,000 and $1 million down 6.2 percent to 1,185, while $1 million plus purchases climbed 14.3 percent to 431. The top two brackets of $600,000 plus housing turnovers made up 28.5 percent, compared to 23.1 percent a year earlier.
The national median sale price fell 1.8 percent from a record $440,000 in March to $432,250 in April. The REINZ stratified housing price index, which smooths out peaks and troughs, climbed 8.5 percent to a record 3971.2 points in April, compared to a year earlier.
"The number of sales in the sub-$400,000 category continue to fall faster than the market over all, suggesting that the loan-value-ratio restrictions are continuing to have an impact on buyer intentions at the lower price points," chief executive Helen O'Sullivan said. "Commentary from real estate agents around the country indicates that first home buyers are an even scarcer commodity than they were in October and November last year."
Last October the Reserve Bank imposed restrictions on the level of mortgage lending banks could make on a deposit of less than 20 percent. The expectation is the restrictions will remain in place until late this year, and were introduced as part of Governor Graeme Wheeler's attempt to slow the housing market without hiking interest rates for fear of fuelling demand for an already elevated currency.
Since then, Wheeler has lifted the official cash rate a quarter-point to 2.75 percent but last week signalled rate rises may not be as regular as previously assumed if the exchange rate remains strong. The high kiwi dollar weakens tradables inflation and would be a factor in the bank's view of the "extent and speed" of hikes in interest rates, Wheeler said at the time.
Today's REINZ figures showed all of the 12 regions surveyed declined in April, compared to March, with Southland reporting the largest monthly fall in sales dropping 28.7 percent.
The number of houses sold in Auckland fell 20 percent to 410 to the year earlier, while the median sale price climbed 10.1 percent to $611,000. Canterbury/Westland sales fell 15.8 percent to 786 and median price climbed 141.9 percent in the year to $395,000.
Both regions recorded a drop in median house prices in the month, although April is often a quieter month after a busy March and further impacted by Easter and school holidays, "however, these factors cannot explain the entire drop between April this year and April last year - the volume of sales has retreated to 2012 levels," REINZ's O'Sullivan said.
The average number of days to sell was unchanged in the year at 33 in April, and fell by one day compared to March.