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New Zealand property sales hampered by strict lending criteria

The latest Quotable Value research for February shows that while property values have fallen 8.9% in the past year, buyer interest appears to be picking up.

'There are definite signs of more activity in the market with more listings, more genuine buyer interest, and more sales,' said spokesperson Blue Hancock.

'However, January had the lowest number of house sales for many years, and with traditionally more activity in February higher sales volume are to be expected,' Hancock added.

Potential buyers are researching the financial impact of a purchase more intensively than in the past, thanks to tighter bank lending rules. 'The ability to meet bank equity requirements is a big talking point and a significant barrier in the sales process. The market is still adjusting to the expectations of the banking industry,' said Quotable Value Auckland valuer Glenda Whitehead.

House prices in the main centres of New Zealand fell by around 10% for February 2009 compared with February 2008.

But while property values may be falling, in some areas the average sale price is rising. An example is Auckland where values have fallen 9.4% but the average sale price has increased from to $502,193 from $496,618 despite increased low price mortgagee sales.

'Within Auckland City our valuers have noticed renewed buyer interest in areas such as Ponsonby, Grey Lynn and Mt Albert, with reports of quality homes in these areas receiving multiple offers or competitive bidding at auctions,' Whitehead explained.

Buyers are being careful, and looking for quality properties in locations with long term value benefits. And vendors with realistically lowered price expectations are finding it easier to sell.

'Prices are still at the lower value levels that were established last year, but there is more optimism in the air that the backward movement may soon slow,' Whitehead added.