Property sales in New Zealand dropped by 20 per cent in August, in the latest sign that the country’s recently overheated housing market was running out of steam.
The latest data from the Real Estate Institute of New Zealand (REINZ) reported the 20 per cent drop in real estate transactions, for both domestic buyers and overseas property investors, confirming that not one region in the country had seen a rise in property transactions during the month when compared to August 2016.
It marks only the third time in the last seven years that no region across New Zealand has seen property sales growth during the month, and many are taking the figures to show that the property market boom in the country could be over.
However, property prices have held strong across New Zealand, rising by 1.7 per cent in August and by 7.6 per cent on an annual basis, indicating that the real estate market is proving robust.
The Reserve Bank of New Zealand increased loan-to-value restrictions (LVR) last year, and REINZ said that these increased restrictions were having an impact on the market.
Bindi Norwell, chief executive at REINZ said: ‘If you looked at the number of properties sold, without looking at the bigger picture, one might assume that the market was showing significant signs of slowing.’
‘However, as prices are holding up, and even increasing, then it suggests that people may be holding off from selling their property unless it’s absolutely necessary.’
There has been some speculation that a continued slowing in the housing market could prompt the Reserve Bank of New Zealand to re-assess its LVR restrictions, which were ramped up last year to discourage high-risk lending.
But outgoing Reserve Bank of New Zealand Governor Graeme Wheeler said last month that there was a risk that the housing market would take off again if the central bank removed its LVR limits.