Real estate agents say sanity is returning to housing market

PHOTO: NZ house prices. FILE

Real estate agents in Hamilton say sanity is returning to the housing market as banks pull preapprovals.

House prices in November continued to increase across the country with the national median price rising to $925,000, according to Real Estate Institute of New Zealand data. The national median price excluding Auckland was $775,000, a 26 percent increase on a year ago.

Real estate agents pocket almost $2b in commission

And in Hamilton prices broke another record jumping to $881,000 from just $829,000 in October.

But Lodge Real Estate managing director Jeremy O’Rourke says things are changing.

O’Rourke says at a recent auction four of the five bidders had their bank preapprovals removed on the day.

He also says fewer homes are selling under the hammer, with prices instead being negotiated after failing to reach set reserves. Only one-third of homes at Lodge’s December 8 auction sold under the hammer.

It comes after a flurry of changes in recent months which are impacting Kiwis’ ability to get a mortgage. That includes higher interest rates and changes to loan-to-value restrictions meaning fewer buyers will be able to secure a mortgage with less than a 20 percent deposit.

In response to the changes, some of the country’s biggest banks started pulling pre-approvals for borrowers with a deposit less than 20 percent. A preapproval is an acknowledgement from a bank someone can borrow an agreed amount.

“There’s still plenty of confidence in the Hamilton real estate market but there is a definite change happening. It’s a tough market to get your head around because there are so many variables in place,” O’Rourke says.

His comments come after Treasury predicted house prices will increase more than 10 percent in 2022 – after a 29 percent rise in 2021.