Housing market 'switched on' in late Nov

First National sees housing market recovery light 'switched on' in second half of November as lending criteria loosens

Real estate agency group First National Group has reported its offices saw a pickup in sales volumes in November, with a surge in activity noticeable in the second half of November after a loosening of bank lending criteria.

“Sales volumes in November were more positive than September and October, although they are still bumping along the bottom of the historic barrel," First National General Manager John Stewart said.

“Several areas commented that from the middle of the month 'someone turned the light switch on' and listing and buyer activity hit record levels for the past two years. Sun, less stringent loan criteria and pent up need to relocate were cited as reasons by both groups," he said.

Reserve Bank figures show the value and number of mortgage approvals hit their highest weekly totals since May, in a sign of an uptick in the housing market in the last week of spring. See more here. See the mortgage approvals interactive chart below.

Banks have been reducing some fixed mortgage rates in recent weeks in efforts to spark the dormant housing market, which is supposed to be in its busiest season, back to life. The latest moves by ANZ, BNZ, National and ASB to cut their 18 month and two year rates followed moves by Kiwibank, Westpac, TSB, SBS and others.

See all mortgage rates here.

There were 5,596 mortgage approvals in the week to November 26, valued at NZ$742.9 million. Both are at their highest since the week to May 21.

“Employment worries of the previous few months appear to have eased, leaving prices and general confidence as the main reason buyers have their hands in their pockets," Stewart said.

“The year-long standoff between vendor expectation and buyer bargain-hunting is settling in some areas. Some of this easing could be driven by the fact that there are more well-presented homes coming onto the market,” he said.

However, demand in holiday home markets remained quiet, he said.

There was demand for large three and four bedroom homes, with prices firming in the four-bedroom sector.

“Interestingly there are fewer buyers for two-bedroom properties and this appears to be driving prices down in that sector," he said.

Banks, flush with invested funds from the Government-guarantee payouts, had loosened their criteria with loans up to 95% of value now widely accepted, he said.

“While this recent flurry in some markets is exciting for those vendors and buyers involved, other areas remain flat. Perhaps the advent of more accessible mortgage finance at low rates still will see activity spread and settle into some sort of stability. Late January and February will provide that answer.”

This article has been published courtesy of Bernard Hickey of interest.co.nz. To view this and more articles from interest.co.nz click here.

Posted: 3 Dec 2010