New development in New Zealand's property market has slowed, with a 9.5% decline in June for home building approvals. The good news is that permits increased 16% in the second quarter, and overall property sales increased as well. For more on the New Zealand property market, see the following article from Property Wire.
The number of new properties being built in New Zealand is falling despite new stock being regarded as a key part of efforts to lead the economy out of recession.
Home building approvals fell for the first time in three months in June, signaling that lower mortgage rates are yet to kick start sustained demand for property.
Official figures from Statistics New Zealand showed that permits declined 9.5% from May. Second quarter approvals rose 16% from the first quarter and the trend in approvals is rising by about 2% a month, the agency said.
But experts had been expecting a faster pace. Economists say that new building approvals need to keep pace with increasing property sales to lift the outlook.
Overall property sales rose 40% in June, according to figures from the Real Estate Institute. So they are much further ahead than new property approvals.
As a result interest rates are expected to remain low. Reserve Bank Governor Alan Bollard cut the benchmark interest rate to a record low of 2.5% in April and will probably leave the rate unchanged at his review to help the economy recover from its worst recession in more than three decades.
There is also concern about the impact of rules governing about 70,000 house sales annually that will change in three months when the new Real Estate Agents Authority opens.
The authority replaces both the Real Estate Institute and Real Estate Agents Licensing Authority's self-governing and regulatory functions.
The aim is to increase standards, raise professionalism and boost consumer confidence in the industry. Currently only the agent who employs branch managers and sales people needs to have a certificate from the Real Estate Licensing Board. Under the new regime, from November all individuals involved in the sector will need to have a license so that all agents, branch managers and salespeople are regulated and accountable.
A new rule book will be brought, new written guidelines must be provided to those buying and selling houses before contractual documents are signed, and there will be a rigorous complaints and discipline procedure.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.