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Rate rises hurt Waikato house sales
By CHRIS GARDNER and JAMES WEIR - Waikato Times | Thursday, 9 August 2007
Rising interest rates are starting to bite in the Waikato but not as much as in some other regions.
Real Estate Institute of New Zealand figures released today show the median house price in the Waikato-Bay of Plenty dropped from $325,000 in June to $320,000 in July. Nationally, the median price dropped from $347,500 to $345,000. The median is the middle number between the highest and lowest sale price.
Hamilton-based institute president Murray Cleland, who is also co-owner of Century 21 Real Estate, blamed the falls on the Reserve Bank lifting the official cash rate for the fourth time in a row to 8.25 per cent.
"You would be silly if you did not say people were starting to take notice of it," Mr Cleland said. He expected the market to bounce back in the summer.
The figures came as a Bank of New Zealand confidence survey showed players in the residential real estate market were "overwhelmingly negative" after the interest rate hike.
The survey, which received only 21 replies, showed growing gloom across all sectors, with 39 per cent expecting the economy to worsen in the coming year. The pessimism was worse than the previous month when 30 per cent expected conditions to worsen. However, the gloom is not as bad as it was in the second half of 2005.
Since the Reserve Bank raised interest rates, big banks have upped floating mortgage interest rates to 10.55 per cent. Bank of New Zealand and Westpac have just raised their six-month and one-year fixed rates to 9.4 per cent, matching ASB, ANZ and National Bank. However, the big banks have held their popular two-year fixed rates at 9.25 per cent.
"It appears that at long last the Reserve Bank's interest rate increases are definitely gaining some traction in the residential real estate market," BNZ's survey said.
Even in early 2006 when there were worries about interest rates, slowing migration and poor consumer confidence, "the anecdotal feedback was never this bad", BNZ said.
Real estate agencies have reported large drops in sales volumes, with one Christchurch agency reporting a 60 per cent fall. An Auckland firm said July sales and listings were "the worst for some time". Sellers were not prepared to meet the market. "I think we will start to see a significant increase in days on the market," the agent said.
House sales in Tauranga were also "very slow". Sellers were unrealistic about prices and buyers were "very nervous about rising interest rates".
There was usually a 10 per cent to 15 per cent drop in sales during winter, but one firm said for some agencies volumes had been cut in half.
By CHRIS GARDNER and JAMES WEIR - Waikato Times | Thursday, 9 August 2007
Rising interest rates are starting to bite in the Waikato but not as much as in some other regions.
Real Estate Institute of New Zealand figures released today show the median house price in the Waikato-Bay of Plenty dropped from $325,000 in June to $320,000 in July. Nationally, the median price dropped from $347,500 to $345,000. The median is the middle number between the highest and lowest sale price.
Hamilton-based institute president Murray Cleland, who is also co-owner of Century 21 Real Estate, blamed the falls on the Reserve Bank lifting the official cash rate for the fourth time in a row to 8.25 per cent.
"You would be silly if you did not say people were starting to take notice of it," Mr Cleland said. He expected the market to bounce back in the summer.
The figures came as a Bank of New Zealand confidence survey showed players in the residential real estate market were "overwhelmingly negative" after the interest rate hike.
The survey, which received only 21 replies, showed growing gloom across all sectors, with 39 per cent expecting the economy to worsen in the coming year. The pessimism was worse than the previous month when 30 per cent expected conditions to worsen. However, the gloom is not as bad as it was in the second half of 2005.
Since the Reserve Bank raised interest rates, big banks have upped floating mortgage interest rates to 10.55 per cent. Bank of New Zealand and Westpac have just raised their six-month and one-year fixed rates to 9.4 per cent, matching ASB, ANZ and National Bank. However, the big banks have held their popular two-year fixed rates at 9.25 per cent.
"It appears that at long last the Reserve Bank's interest rate increases are definitely gaining some traction in the residential real estate market," BNZ's survey said.
Even in early 2006 when there were worries about interest rates, slowing migration and poor consumer confidence, "the anecdotal feedback was never this bad", BNZ said.
Real estate agencies have reported large drops in sales volumes, with one Christchurch agency reporting a 60 per cent fall. An Auckland firm said July sales and listings were "the worst for some time". Sellers were not prepared to meet the market. "I think we will start to see a significant increase in days on the market," the agent said.
House sales in Tauranga were also "very slow". Sellers were unrealistic about prices and buyers were "very nervous about rising interest rates".
There was usually a 10 per cent to 15 per cent drop in sales during winter, but one firm said for some agencies volumes had been cut in half.
