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First signs of a cooling housing market

The property market displayed the first signs of cooling last month, but prices continue to rise, according to the latest REINZ data. 

Thursday, May 13th 2021, 11:31AM

Housing market activity slowed in April, with nationwide sales down 13% month-on-month, Auckland down 21%, Otago -18%, and Waikato down -18%.

It follows the reintroduction of loan to value ratio restrictions, and the Government's clampdown on investors, including an extended bright-line test and the removal of interest deductibility. 

However, house prices rose once again. According to the REINZ report, house price inflation rose by 1.7% in April, an annual jump of 26.8%.

ASB, commenting on the data in a new report, believes the housing market has been "resilient to change".

"We reiterate our view that a hard landing for the housing market is unlikely," the bank's economists, including Mike Jones, said. "The April falls in house sales were probably overstated to some degree by the past few months’ rush by buyers to beat various policy changes."

Kiwibank economists said "evidence of a slowing market is hard to find". 

But the Kiwibank team, including senior economist Jeremy Couchman, expect house prices to cool in the second half of this year.

"Recent policy changes, such as tax changes aimed at property investors, will play a role. In addition, new housing supply is currently outstripping growth in demand while NZ’s borders are closed. Finally, mortgage rates are expected to rise as we get closer to the time the RBNZ is expected to begin tightening monetary policy – toward the end of next year."

Despite fears that the Reserve Bank will impose stricter lending rules, such as tougher LVR limits or DTIs, the Kiwibank team does not expect any changes soon. 

"There isn’t clear evidence to suggest tighter LVRs are needed at present. Data on high-risk LVR lending looks to be moving in the desired direction, particularly for property investors," Kiwibank said.

Tags: DTIs house prices housing market Lending LVR

« Strong growth in lending continues as Prospa supports SME recoveryASB launches 1.79% variable rate for new builds »

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 ▲2.85 ▲3.25 3.55
ANZ 4.44 ▲3.20 ▲3.59 ▲4.00
ANZ Blueprint to Build 1.68 - - -
ANZ Special - ▲2.60 ▲2.99 ▲3.40
ASB Back My Build 1.79 - - -
ASB Bank 4.45 ▲2.85 ▲3.25 3.55
Basecorp Finance 5.49 - - -
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - ▲2.85 ▲3.25 ▲3.55
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 4.55 ▲3.45 ▲3.85 ▲4.15
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online 2.25 1.85 2.35 2.65
Heretaunga Building Society 4.99 3.80 3.90 -
Lender Flt 1yr 2yr 3yr
HSBC Premier 4.49 2.19 2.45 2.69
HSBC Premier LVR > 80% - - - -
HSBC Special - 2.25 - -
ICBC 3.69 2.35 2.75 3.05
Kainga Ora 4.43 2.88 3.28 3.59
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.75 3.50 3.74 4.34
Kiwibank - Offset 3.75 - - -
Kiwibank Special 3.75 2.65 2.89 3.49
Liberty 5.69 - - -
Nelson Building Society 4.95 2.99 3.24 -
Lender Flt 1yr 2yr 3yr
Pepper Essential 4.79 - - -
Resimac 3.39 2.98 2.79 3.29
SBS Bank 4.54 2.99 3.39 3.59
SBS Bank Special - 2.49 2.89 3.09
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - 2.35 - -
The Co-operative Bank - Owner Occ 4.40 2.55 2.95 3.39
The Co-operative Bank - Standard 4.40 3.05 3.45 3.89
TSB Bank 5.34 3.35 ▲3.75 ▲4.05
TSB Special 4.54 2.55 ▲2.95 ▲3.25
Wairarapa Building Society 4.99 3.55 3.49 -
Lender Flt 1yr 2yr 3yr
Westpac 4.59 ▲3.45 ▲3.85 4.09
Westpac - Offset 4.59 - - -
Westpac Special - ▲2.85 ▲3.25 3.49
Median 4.54 2.92 3.25 3.49

Last updated: 20 September 2021 8:55am

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