A pending budget, and possible tax changes, has left New Zealand property buyers uncertain. This has led to stalled sales and plunging mortgage approvals to open the year. Meanwhile, property prices soared in March as the market gains strength, leading many to resort to renting instead. See the following article from Property Wire for more on this.
There are fewer property sales and loans being processed in New Zealand as potential buyers display pre-budget jitters but prices have recorded a record high.
The number of people who received mortgages in the first quarter of this year saw a record 30% decline on 2009, as house sales stalled and investors threw caution to the wind about possible tax changes in the budget.
One-third fewer mortgages were approved in the 13 weeks to April 9, compared with the same period last year, while the overall value of loan approvals dropped 25.2%, according to the figures compiled by the Reserve Bank of New Zealand from about 95% of home loan lenders in the New Zealand market.
According to property expert Olly Newland property turnover had slowed, reducing the numbers of mortgages being approved as some investors were being spooked by speculation the Government could stop property investors claiming depreciation tax breaks in the May 20 budget.
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At the same time more people were renting as they came to realize it was cheaper than owning a property, while capital gain remained so elusive, he said.
Lee Hatton, Head of Retail Northern Region, at BNZ said overall the market had softened with prospects for new lending slowing down. ‘In comparison to this time last year, we have seen less customers looking for approvals but our overall approval rate has actually increased for this period,’ he explained.
Goldman Sachs JBWere economist Philip Borkin said talk of changes to the tax system on property investment had left many investors sitting on the fence while a sharp rise in longer-term mortgage rates had also added to the dip in numbers of people taking out loans.
But the latest figures also show that property prices reached a 20 year high for the month of March. The median sale price of homes rose to $360,500, some 7% up on the same period last year, and the highest March figure in 20 years, according to the data from the Real Estate Institute of New Zealand.
REINZ president Peter McDonald said the apparently strengthening market was an encouraging sign. ‘Despite an abundance of good listings at present, we are still seeing prices going up as a result of strong demand from genuine home buyers,’ he explained.
McDonald said the figures were in contrast to November figures when listings were short and prices went up because demand was not being met.
The largest annual percentage increases were in Auckland, up 9.31% and Taranaki, up 8.52%. Southland also showed strong growth with the annual median price rising more than 5.3%.
Another indicator of the strengthening market was the recorded fall in the median number of days which fell from 46 to 35 from February to March. Sales were quickest in Wellington, Canterbury/Westland and Otago at 29 median days.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.