Boomer month divides economists
Another bumper month in the housing market has economists debating whether or not the market is losing some heat after Government attempts to slow it down.
House sale figures out yesterday show the real estate market was still piping hot last month, the busiest April in five years.
The national median house price was also up 19.1 per cent on a year ago to $810,000, according to the Real Estate Institute.
But the institute’s acting chief executive, Wendy Alexander, said while the national picture represents great busyness, ‘‘the reality is that we’ve seen the number of sales decrease when compared to March’’.
While this was expected as winter approached, she said there were definite signs people were taking a ‘‘wait-and-see approach’’ after recent changes to lending and the tax treatment of residential property investors.
‘‘We have seen some regions start to show signs of prices easing and the rate of growth slowing down a little, which will be welcome news to those looking to get on the property market,’’ Alexander said.
‘‘Additionally, it might be the first signs that the re-introduction of the LVRS [loan to value ratios] is starting to have the desired effect.’’
Among those who agreed with her were Infometrics economist Paul Barkle who said house sales had lost momentum.
Sales in April were down almost 10 per cent on March, and notably more in Auckland (down 15 per cent).
And while the figures had not shown the decline many were expecting after March’s announcement, there were ‘‘many anecdotes of emptier auction houses and fewer investors through open homes in April’’.
‘‘Weaker sales and less demand will eventually translate into a softening of house price growth across the country,’’ he said.
Others felt REINZ’S concerns were overstated. Westpac senior economist Michael Gordon said the market seemed ‘‘perky’’ and did not offer much evidence yet of a cooling market.
And ASB senior economist Jane Turner said it would have been surprising ‘‘not to see some deceleration’’ in the market.
‘‘After all, there’s been a lot thrown at the high-flying property market in the past couple of months. Still, we reiterate our view that a hard landing for the housing market is unlikely.
‘‘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. And looking through some of the other data on offer shows the market is still very tight.’’
Kiwibank senior economist Jeremy Couchman said the latest data provided ‘‘limited evidence’’ that the policy changes were taking the heat out of the market so far, but he was expecting prices to cool from the second half of the year.
Apart from the policy changes, more housing was coming to the market. Building consents were at a record high and closed borders had limited population growth.
‘‘The construction industry is currently building a surplus of homes for the first time in almost decade. A surplus of homes will likely be repeated this year and next.’’