Property market slowed by LVR limit

Bank economists agree the housing market is slowing, due in part at least to the Reserve Bank's crackdown on low-equity mortgages.

Figures from the Real Estate Institute show that house sales fell 6.6 per cent in November on the year before.

However, there was no dent in house prices, which hit a record median of $425,000, up nearly 11 per cent.

Economists said the market was losing steam but it remained tight, which was keeping prices high.

Westpac said it had expected November would be the month when rising interest rates and the limits on high loan-to-value ratio (LVR) lending would start to bite.

House sales had fallen 10 per cent over the last two months, the bank said.

"Falling house sales is consistent with our view that the high-LVR lending restrictions would bite hard initially. However, we expect that the impact will moderate over time."

Auckland mortgage broker John Bolton said the LVRs had taken the edge off the market which was "not nearly as crazy as it was".

"Thumbs up to the Reserve Bank," he said. "What they're trying to do is working and whereas I was probably a bit nervous about it two months ago . . . I think it seems to be settling reasonably sensibly."

Bolton said he was now seeing banks beginning to lend above 80 per cent again, and the Reserve Bank had moved to exempt new builds, "which sort of suggests they've adapted to the new framework".

ASB economist Daniel Smith noted the number of days it took to sell a property had stabilised, suggesting the price increases were at or approaching their peak.

However, the stock of houses on the market remained exceptionally low, consents were weak outside Canterbury, and new listings had stalled after several encouraging months.

"We do expect the rate of house price growth to ease over the coming year, but only gradually," Smith said.

The number of first-home buyers remained comparatively high in Wellington, which hit a new median high of $420,000, up 3.7 per cent.

Sales were down by 6 per cent, with all parts of the region other than Upper Hutt seeing declines.

Auckland region's prices continued to soar, up nearly 15 per cent on a year ago to $620,000.

Sales volumes were down 4.3 per cent on a year ago, and the decline was felt across the region.

REINZ chief executive Helen O'Sullivan said she had noted two unusual changes in this month's figures.

Firstly, house sales usually jumped around 11 per cent between October and November but this year their rise was much more muted, up 2.7 per cent.

She also noted house sales below $400,000 were down almost 20 per cent compared with November last year.

Although it was too early to detect a trend, O' Sullivan said the lack of cheaper houses in the mix could have driven the national median price higher.

"If sales in the lower pricing bands are taking longer to complete, or not occurring, this would impact on the median house price."