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\nPhoto: RNZ \/ Kate Newton\n<\/p>\n
Housing market activity has got off to a slow start this year, Cotality says.<\/p>\n
The property data firm said sales volumes in February were 6.8 percent lower than a year ago, after a 7.8 percent fall in January.<\/p>\n
It was the first time in almost three years that sales had declined in two consecutive months.<\/p>\n
Values were stable, up 0.2 percent in the month although still down 1.2 percent on a year earlier.<\/p>\n
Cotality chief property economist Kelvin Davidson said buyers were cautious.<\/p>\n
“December activity looked unusually strong, so some of the recent softness may reflect timing rather than a new downward trend.<\/p>\n
“But even allowing for that, the housing market is still in a phase where buyers are taking their time.”<\/p>\n
He said it was possible that some people brought forward property deals in December to take advantage of cashback incentives from the banks.<\/p>\n
“I don’t necessarily think it’s the start of a downwards trend or anything, given mortgage rates are down, and the economy’s showing signs of recovering, and confidence seems to be recovering a little bit.<\/p>\n
“But I guess just a good reminder that there’s still a bit of caution out there. Buyers are still cautious, sellers are still cautious, you know, the market’s certainly not rushing anyway.<\/p>\n
“We’re still seeing that in property values. They’re pretty flat, even the markets that are probably more resilient are still not seeing a boom\u2026buyers know they have the power.”<\/p>\n
First-home buyers were still a significant force in the market, responsible for 27 percent of purchases across January and February.<\/p>\n
Davidson said improving affordability and lower mortgage rates helped.<\/p>\n
“KiwiSaver withdrawals continue to play a role in helping buyers assemble deposits, while the banks’ low-deposit lending allowances are also supporting access to credit.<\/p>\n
“In some cases, mortgage repayments can now look similar, or cheaper than rents, which can encourage tenants to move from renting to buying if they’re able to save for or access a deposit.”<\/p>\n
People moving from one owner-occupied property to another were 26 percent of purchases and investors 24 percent.<\/p>\n
Davidson said those movers would be a segment of the market to watch this year,<\/p>\n
“When confidence is up, when job security is up, movers tend to relocate or trade up or get that house in that better suburb or the bigger house or whatever.<\/p>\n
“During the last couple of years, they’ve been quiet because that economic backdrop has been pretty subdued.<\/p>\n
“If we can get a sustained recovery this year, you’d anticipate that movers would start to become a bit more active and trade up, that sort of thing.<\/p>\n
“So that’s definitely one I’m keeping an eye on. It’s not there yet.”<\/p>\n
Rents still soft<\/p>\n
Rents continued to be soft, he said.<\/p>\n
MBIE bonds data shows the median national rent fell by 0.8 percent in the three months to January compared with a year earlier.<\/p>\n
Davidson said the combination of softer population growth and already high rent levels relative to incomes was limiting further increases.<\/p>\n
“Rents have already risen significantly in recent years, and wage growth has eased, so there isn’t a lot of scope for further increases at the moment,” he said.<\/p>\n
“More likely we’ll see a period of flat or only modest rental growth while the market adjusts.”<\/p>\n
Davidson said there were a number of forces that would act on the market this year. He said war in the Middle East could affect job confidence, which might slow the market.<\/p>\n
“It’s not difficult to imagine that things sort of trend sideways for a while.”<\/p>\n
But he said there was also a wider mindset change happening.<\/p>\n
“We are going to be able to look back in hindsight and say, yep, that was the point where the market did change a little bit.<\/p>\n
“But I detect at more and more things I go to, more and more people I talk to, audiences I hear from and talk to … just a bit of a psychology change going on.<\/p>\n
“I think people are coming around to the idea that ever rising house prices isn’t necessarily the best thing. And maybe we’re at an interesting turning point, potentially, where people do start to question that assumption that property prices will always go up.<\/p>\n
“I think we’ll still see property price growth, but it might be a bit lower in future than it’s been in the past.”<\/p>\n
About 60 percent of mortgages by value will refix over the next 12 months.<\/p>\n