Auckland property sales have dropped by 20 percent in the wake of the Government’s ban on foreign buyers, an economist says.
In December, Auckland property sales were significantly lower after the ban came into effect in October, according to Westpac chief economist Dominick Stephens.
More than a third of traffic to realestate.co.nz in November came from overseas, with the site saying the ban had done little to dampen interest. But experts suspect foreign buyers may have flooded in to buy property before the ban came into effect.
In his January property market report, Mr Stephens pointed to Auckland’s drop in property sales as evidence the ban has had an impact on the city’s property market, where foreign buyers had previously been quite active.
“Housing market turnover shot higher in October (just before the ban came into force), but has subsequently tanked,” Mr Stephens wrote.
He said based on “seasonal adjustment, and taking into account that the Real Estate Institute initially understates the number of sales given in a month, property sales are now about 10 percent lower than they were a year ago”.
“The regional breakdown suggests that the foreign buyer ban’s fingerprints are all over this. The big drop in sales was concentrated in Auckland, where seasonally adjusted sales dropped 20 percent in December, and to a lesser extent in Wellington and Christchurch.”
It adds to the latest QV House Price Index data which showed Auckland property values have declined, as well as realestate.co.nz figures that showed the number of new listings in Auckland is down 17.7 percent compared with last year.
Whether the foreign buyer ban will have a direct impact on Auckland property prices is not clear. A drop in prices could be offset by low interest rates and loosening of mortgage lending restrictions on banks, Mr Stephens said.
There is a risk Auckland property prices could fall though, he added, since “a drop in house sales is usually a good indication that house prices are about to weaken, so there is a risk that Auckland house prices could start falling again”.
“Meanwhile, prices in the lower North Island, Otago and Southland continue to roar away.”