Economists predict that lending restrictions and higher borrowing costs will contain the housing market in the short term. The Real Estate Institute says sales fell in January, while the pace of price rises slowed. The fall in sales has been sharp since the Reserve Bank introduced new lending restrictions in October for those with small deposits.
Photo: RNZ / Diego Opatowski
The Real Estate Institute says about 4700 houses sold in January, a decrease of 4 percent compared with the same month last year. The median price rose 9 percent to $402,000 and the Institute said much of the increase was due to higher prices in Auckland.
Institute chief executive Helen O'Sullivan attributed the slow down to Reserve Bank efforts to cool the market.
"They certainly have had an effect on the market in the last three months, and thats why it's particularly difficult to pick the trends because you've got that impact as well as the seasonal impact just combining to create quite a lot of confusion."
Further comment
Radio New Zealand's economics correspondent said January tended to be a quieter time for the real estate industry as people went on holiday rather than buy or sell a house.
Our correspondent said the 4 percent decrease in house sales in January compared with last year was even more marked for houses valued under $400,000, a key market for first time home buyers, where sales fell 16 percent. And, while the median price rose 9 percent, it is rising at a slower pace.
Activity in the housing market may falter further if the central bank raises interest rates next month, which many economists believe is highly likely. Yet most analysts say the future of the sector, at least in Auckland and Christchurch, appears healthy, driven by immigration and the rebuilding programme in Christhurch.
