Residential real estate sales fell 15% in April as the housing market remains subdued with the government's upcoming budget expected to bring in tax changes for property investors, according to the latest Real Estate Institute of New Zealand (REINZ) data.
Total residential sales sank from 6,161 in March to 5,207 last month and were down 16% from the same month a year earlier, according to REINZ figures released today.
The institute's housing price index, which was constructed with the Reserve Bank to provide a more accurate reading of house prices, fell 0.4% to 3,257.2 in April, and in the three months ended April 31.
The national median price fell 1.2% to $356,000 last month, and was up 4.7%, compared to the same month a year earlier.
The time taken to sell houses rose to 40 days last month form 35 days in March, though it was down from 42 days in April 2009.
The government's budget is expected to introduce changes to the taxation rules around investment property, with the removal of depreciation claims on buildings with rising values the most widely anticipated announcement.
Earlier this month, state-owned valuer QV said the property market was subdued in April as buyers and sellers wait for the tax changes.
"The housing market is still pretty soft, but the bottom-line is that today's data is irrelevant - everyone's waiting for the details around the Budget," said Philip Borkin, economist at Goldman Sachs JBWere. "The question is, how aggressive [is the government] going to go?"
Also weighing on buyers' minds is the threat of rising interest rates. Reserve Bank Governor Alan Bollard said in a speech this month that he will begin hiking the official cash rate in "small steps" from the middle of the year, and with the higher-than-usual 43% of borrowers on floating rates, should get more bang for his buck when he starts to go.
The market is betting Bollard will lift the OCR by 196 basis points over the coming 12 months, according to the Overnight Interest Swap Curve.
Goldman Sachs JBWere's Borkin said "with likely tax changes and pending interest rate increases we think the market will remain pretty soft over the next 12 months."
The Auckland median house price fell to $470,000 from $475,500 in March, while sales fell to 1,578 from 2,187 a month earlier.
The Wellington median dropped to $390,000 from $409,000 in March, while sales decreased to 623 from 763.
The median price in Christchurch gained to $330,000 from $320,000 in March, though the number of sales slumped to 511 from 595.
The Dunedin median slipped to $248,000 from $249,000 in March, with sales down to 175 from 213.
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