LVR restrictions blunt turnover

There were 6778 residential property sales in the month, up 2.1% on October last year and up 0.9% compared to September. 

The national median price increased $7525 compared to September to $407,525, a new record median high. 

Auckland, Canterbury/Westland and Waikato/Bay of Plenty also reached new record median highs in October.

REINZ chief executive Helen O’Sullivan said: “Real estate sales volumes eased back in October following the introduction by the Reserve Bank of restrictions on high-LVR lending.  Comments by agents from around the country indicate heightened levels of uncertainty for both purchasers and vendors about the impact of these changes, which is causing a number of prospective buyers and sellers to hold off from committing to the market until they are more comfortable.“  

She said: “Typically in the real estate market sales volumes change more quickly than prices and overall sales volumes are lower than what we would expect for this time of the year, although in a few regional centres sales are strong.  Northland and Otago stand out as two regions with strong sales growth, although in other regions the picture is far more mixed.”

O’Sullivan said the full effect on prices of the new LVR restrictions might not show up in the national or regional medians for a few months as buyers with pre-approvals made their purchases and the market adjusted to these new conditions.

Seven regions recorded increases in sales volume compared to October last year, with Northland recording an increase of 25.2%, followed by Otago with 17.5% and Canterbury/Westland with 13.4%.  Six regions recorded an increase in sales volume in October compared to September, with Otago recording an increase of 31.9%, followed by Central Otago Lakes with an increase of 17.0% and Manawatu/Wanganui with an increase of 10.2%.

Auckland, Canterbury/Westland and Waikato/Bay of Plenty all recorded new median highs in October, with Auckland reaching $582,000, Canterbury/Westland $380,000 and Waikato/Bay of Plenty $335,000.  Compared to October 2012, Central Otago Lakes recorded the largest increase in median price, up 19.5%, followed by Northland with 12.5% and Canterbury/Westland with 10.8%.

Houses took the same length of time to sell in October as they did in  September, 31 days. 

Nationally there were 1580 dwellings sold by auction in October, representing 23.3% of all sales and an increase of 48.3% on the number of dwellings sold by auction in October 2012. 

REINZ said some softening of this rate might be expected in the wake of the introduction of restrictions on low LVR lending. Few buyers with smaller deposits are able to bid at auction because of the difficult in getting preapprovals.