House sales fall 14.8% in May from year earlier, LVR curbs crimp lower-value sales
New Zealand house sales fell in May from the same month last year and the volume of sales below $400,000 tumbled suggesting some heat is coming out of the market and restrictions on low-equity loans are sapping demand at the cheaper end of the market.
Sales rose 15.9 percent from April to 6,572 in May and were down 14.8 percent from the same month of 2013, according to the Real Estate Institute of New Zealand. The national median price fell $2,250 from April to $430,000 to be up $38,000 from a year earlier.
Last week, the Reserve Bank affirmed its track for raising borrowing costs and said strong net immigration and income growth will boost housing demand, while house price inflation is expected to moderate as more supply becomes available. Its restrictions on high loan-to-value mortgages, introduced last October, has seen the percentage of loans at LVRs of 80 percent or more fall to 4.3 percent in April, slightly up on March but down from nearly one third of all home loans when the policy was introduced.
The number of sales below $400,000 fell by 25 percent in May from a year earlier, following a 31.6 percent slide in April, which the REINZ said "may be indicative of fewer sales in the lower price brackets since the imposition of the LVR restrictions."
Days to sell rose by four to 38 between May and April and the median was three days longer than in May 2013.
"We would normally expect an increase in sales in May compared to April, however, after taking seasonal factors into account the increase was just 1.6 percent," said REINZ chief executive Helen O'Sullivan. "This leads us to conclude that the drop in sales in April due to the combination of Easter and Anzac Day has not created an offsetting increase in sales in May."
The REINZ Stratified Housing Price Index, which adjusts for any skew in the median value of houses sold month to month and is the Reserve Bank's preferred measure, fell 1.2 percent from April to 3,925.1.
The total value of residential sales, including sections, was $3.55 billion in May, compared to $3.09 billion in April, and $3.78 billion in May 2013. For the 12 months ended May the total value of sales was $39.55 billion.