While the latest real estate figures didn't show a sharp shift in the housing market many were expecting, there may be "early signs of a change", say economic experts.
Last month saw the highest number of property sales for an April month in years, according to the latest figures from the Real Estate Institute of New Zealand (REINZ), even though the Government announced a crackdown on investors in March.
But while it was a bumper April month, sales were down compared to March which REINZ says may reflect a "wait and see approach" from investors and first home buyers in the wake of changes to loan-to-value ratios and announcements from the Government.
There were 7218 properties sold last month nationally, the most for April in five years. It was particularly big for the West Coast, which had its strongest April in 15 years, and Canterbury, where sales hit a 14-year April high.
April saw median house prices across New Zealand increase by 19.1 percent to $810,000, compared to April 2020. This is a smaller increase than in March, where median house prices rose 23.6 percent year-on-year and set a new record high for the country.
Infometrics says the Government's latest measures had little effect on prices nationally, but change could be on the way.
"Strong momentum and cheap credit are likely to be responsible for continued house price growth, but there are early signs of a change coming through in sales numbers," they say.
"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.
"If record high residential consents successfully translate into activity, the increased supply of available houses will also contribute to a future softening of house price growth. However, supply chain disruptions and capacity constraints remain a major concern for the construction industry."
'The market is still very tight'
ASB says the first signs New Zealand's property market was cooling were shown in the REINZ report and it would've been surprising not to see some deceleration in sales.
"There's been a lot thrown at the high-flying property market in the past couple of months. LVR restrictions are back on, with restrictions for investors tightened to 60 percent. The mortgage holiday scheme has come to an end and, on 27 March, interest deductions on residential investment property were removed. The prior downtrend in mortgage interest rates has largely been arrested," they say.
"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."
But ASB expects that over the next few months, housing activity and the pace of price gains will let up.
"Our updated forecasts imply house price inflation slowing to 'just' 10 percent [year-on-year] by the end of the year. The risk is that the market stays stronger for longer."
'More now needs to be done'
Derryn Mayne, owner of real estate business Century 21 New Zealand, believes the housing market is still too hot for most young Kiwis.
"Eyes will now be on Budget Day to see what action will be taken for desperate first-home buyers," she says.
"Sure, the Government has tinkered with the price caps and income thresholds of first-home buyers applying for HomeStart Grants and First Home Loans. However, more now needs to be done if the Finance Minister is to 'tilt the balance more towards first-home buyers' as he has long promised."
Mayne says Budget 2021, which will be delivered on May 20, needs to deliver bold measures to actually switch renters into owners.
She says with interest rates so low, there's no use bringing back low-interest 'state advances' loans, but the Government could establish partnership models such as 'rent to buy' schemes or act as guarantor for eligible first-home buyers' borrowing.
"Another initiative could be interest-free government loans for deposits on first-homes - with borrowers paying them back over time via Inland Revenue. Those in tertiary study can get interest-free student loans as education is rightly seen as a good investment and asset. That same logic could be applied here," she says.
With the total number of properties available for sale in New Zealand at the lowest level for an April month since records began, Mayne believes now is the time to sell a residential property to achieve maximum exposure with prices remaining very strong.