Lending controls linked to decline
The continuing downturn in house sales in Palmerston North is hitting homeowners and real estate agents in the pocket, the Real Estate Institute says.
Sales volumes fell 16 per cent for Palmerston North in July this year compared to the same month last year, REINZ data released this week revealed.
Real Estate Institute Manawatu spokesman Andy Stewart said there seemed to be no end to the trend.
There was no doubt the slowing of the market and reduction in sales were directly attributable to the Reserve Bank loan-to-value ratio (LVR) controls restricting home loan lending, Stewart said.
He said the decreasing number of listings for Palmerston North had created a critical listing shortage in the city.
"Attendance at open homes varies from house to house but generally new listings in the mid-price range are attracting reasonable numbers."
It's not just a tough time for homeowners looking to sell but agents also, Stewart said.
"Real estate people don't get paid if they don't get sales.
"It's only a period of time before people say ‘I can't do this, I've got to go and get a real job'."
He said the industry "can be a bit of a rollercoaster for agents".
The median price across the region fell by $10,000 compared to July 2013.
REINZ chief executive Helen O'Sullivan said vendors continued to be concerned about the impact of LVR restrictions on selling prospects, with the number of listings falling across the region.
The LVR restrictions are designed to limit high-risk lending but they are also thought to dampen down the real estate market because fewer buyers are able to get low-deposit loans.
The coming general election was also generating some uncertainty, and interest rates were rising, so buyers were being cautious.
Levin had a drop of 32 per cent in sale volumes between July last year and July this year and Feilding declined by 40 per cent for the same period.
The national sales volumes were down 13 per cent last month compared to 2013 and up 2.3 per cent compared to June this year.
The national median price was $416,000 for the month of July, an increase of $31,000 compared to July 2013, but a fall of $11,250 from June.