Sales activity across the Auckland region has slowed over recent months in response to the latest round of lending restrictions imposed upon investors, by the Reserve Bank of New Zealand.
Values, however, remain supported by strong market fundamentals, predominantly, a rapidly expanding population, a low interest rate environment and most significantly, a regional housing shortage which continues to grow.
Lending statistics issued by the Reserve Bank of New Zealand clearly illustrate the influence of the tightening of credit conditions upon investors. The share of all new mortgage lending to the investor category fell from approximately 38% in mid 2016 to just over 27% as at January this year. A similar slowdown in investor activity was seen in late 2015 following the implementation of the initial round of lending restrictions. On that occasion investors returned to the market within a few weeks. The downturn has lasted longer on this occasion and it remains to be seen as to when the share of sales to investors increases again.
The softening of the market is also reflected in an increase in the total inventory available to the market as shown in the table below. While the total inventory and weeks to sell figures remain at below their nine year averages both have increased over recent months. In April 2016 the inventory figure was just 5,711 and the weeks to sell figure was sitting at just 9.3...
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