Strong house sales boost conveyancing market
The booming housing market has been positive for conveyancers, with house sales almost reaching levels last seen in the 2007 property boom. However, there are signs that the Reserve Bank of New Zealand’s recent moves to cool the housing market are having an effect.
In the first nine months of 2016, the Real Estate Institute of New Zealand reported a total of 69,596 residential sales. This was up 3.5% on the 67,252 sales in the first nine months of 2015. Sales still haven't quite hit the peak seen in 2007, when in the first nine months there were 71,813 residential sales.
A cooling market
The booming housing market has long been a bugbear for the Reserve Bank of New Zealand, which is concerned that if the property bubble bursts, a big drop in house prices could threaten the country’s financial stability and pose a threat to the broader economy.
To try and take some of the heat out of the market, the RBNZ recently introduced tighter lending restrictions for property investors, who in most cases now require a deposit of 40%, while owner-occupiers need to stump up with a 20% deposit. Banks have some leeway to make a small amount of lending outside of these parameters.
ANZ economists say evidence is mounting that the central bank’s restrictions are cooling the housing market.
“House sales [for the month of September] are down nearly 10% versus a year ago and houses are taking longer to sell, though the market is still incredibly tight,” say ANZ economists in their latest Property Focus report.
But will it be short-lived?
ANZ said that while the tighter lending criteria was causing concern amongst property investors that it “will cramp their style”, there appears to be little concern that the restrictions could topple the housing market and confidence about buying property remains high.
In the latest ANZ Property Investors’ Federation Survey, the proportion of investors planning to buy more properties rose to a net 69% of respondents, the highest since 2009. ANZ said when the RBNZ introduced tighter mortgage lending restrictions in the past they had a relatively short-lived impact, “so investors may be assuming the same will occur this time”.
Residential Dwelling Sales, January to September inclusive (REINZ figures)
|All of New Zealand||69,596||67,252||43,006||71,813|
Residential Dwelling Sales by Region, January to September inclusive
|Central Otago Lakes||1,324||1,181||12.1%|
Last updated on the 16th September 2019