Whether house sales stall in the face of easing mortgage approvals and higher interest rates will be seen over the next few months, ANZ’s economists say.
They have released their latest Property Focus report. It says that while residential real estate turnover rebounded more than 10% in July, there is a slow downward trend in sales volumes.
They said that prices were supported by supply issues but the durability of that upswing was questionable considering that prices were already stretched compared to incomes.
“How much lower sales go will be largely dependent on the amount of inventory on the market. The impact of high bank capital requirements and the October introduction of speed limits on high LVR lending may also play a role.”
The volume of mortgage approvals in July was down 6% on the same time last year. The value of approvals was 1% lower.
Of the report’s ten gauges, which indicate where property prices may be headed, only migration is now pointing purely up.
People are making the most of affordability, the report said, before firming mortgage rates turn it around. Interest rates have lifted up to 20 basis points for terms of two years and longer.
But at present, mortgage servicing as a percentage of disposable income is still at a 10-year low.
The flow of people into New Zealand, and Auckland in particular, is gathering momentum and demand is at a four-year high. Consent levels are back to pre-recession levels, which should improve supply issues eventually.
The number of months’ worth of property for sale on the market is still at an all-time low in Auckland but has improved around the rest of the country, where more construction is under way.
ANZ’s report said that annual rental increases had passed 5% on average, much higher than other estimates over recent months and indicating that the rental market may be firming.