Restrictions on high-debt lending caused a fall in home sales year-on-year to February, according to the Real Estate Institute of New Zealand (REINZ). The restrictions mostly impacted the first time buyers, experts said.
But house prices rose after two months of decline, the price rise in February being attributed to an increase in sales of higher-priced properties.
The median transaction price in New Zealand increased 8.6% to NZ$ 415,000 (US$ 355,406) from a year earlier, though home sale volumes fell by 7.6% year-on-year to February, with real estate agents selling 6,125 residential properties, according REINZ.
Sales of higher priced properties worth NZ$ 600,000 (US$ 513,840) to $1 million (US$ 857,200) rose by 9.2%, REINZ said. Sales of properties worth less than NZ$400,000 (US$342,880) fell by 18%. The total value of residential sales rose to NZ$ 3.17 billion (US$ 2.72 billion) in February, from $3.15 (US$ 2.70 billion) a year earlier.
"While first home buyers are mostly sitting on the sidelines, the focus on the market has moved to higher price ranges, with a subsequent upward influence on the median price… The increase in prices may be evidence of more activity taking place in higher price brackets, beyond the reach of most first-home buyers,'' said REINZ’s chief executive Helen O'Sullivan.
"The results for February show further evidence that the national sales volume trend is easing, with only two of 12 regions showing an increase in sales volumes compared to February 2013," said O'Sullivan.
She added that market feedback suggests first homebuyers may be tentatively returning - with some assistance - to certain markets. “This is by no means a consistent message, with views decidedly mixed across the country; some regions are reporting increasing interest from first home buyers, while others report little in the way of activity," she said.
Continuously rising home prices had forced the Reserve Bank of New Zealand to introduce loan-to-value ratio (LVR) restrictions on mortgage lenders in October, 2013.
Banks are restricted to issuing 10% of new residential loans to customers with loan to value ratios (LVR) of more than 80%, i.e., generally customers should deposit at least 20% of the home's value.