Having suffered a slow period after an inconclusive general election, New Zealand property sales jumped 17.8 in November, helped by seasonal spring demand and buying by foreigners before the new Labour-led government imposes a ban early next year.
It was the largest October to November increase in six years, the Real Estate Institute of New Zealand said. On a seasonally adjusted basis the rise was 4.5 per cent.
That was a rapid pick-up from a previously reported 0.8 per cent monthly increase in October, or a seasonally adjusted 1.5 per cent rise, when market activity was weighed down by political uncertainty.
Labour came to power in October, forming a coalition after receiving backing from a small nationalist party that held the balance of power after inconclusive elections in September.
Prime Minister Jacinda Ardern’s government aims to take several steps, including the ban on foreign buyers of existing properties, to address what she has called a “housing crisis”.
Annual house prices rose four per cent in November on a seasonally adjusted basis across the country but slipped 1.2 per cent on the year in Auckland, the largest city.
“November traditionally sees a robust increase, although the change in November compared to last month was stronger than we would have expected based on past data,” Bindi Norwell, chief executive of REINZ, said.
“We’ve also seen some of our European and US buyers accelerate their purchases ahead of the upcoming foreign buyer ban, as they were concerned about the impact on their ability to purchase property here.”
House prices have risen more than 50 per cent nationally in the last decade, but the market has been cooling as the economy slows and due to home loan restrictions.
The central bank said in November it would undertake a “modest easing” of loan-to-value ratio restrictions from January as it also expects the new government’s policies to have a dampening effect on the housing market.
Lyndon Fairbairn, director of New Zealand Property Solutions, which helps people from overseas to buy into New Zealand property, said lots of firms had put ads about the ban recently, increasing the sense of urgency from foreigners seeking to buy in New Zealand.
“Our enquiries from South-East Asia and China have increased by probably about 25 per cent in the last two to three weeks,” he said in November, referring to general enquiries about both existing and new properties in New Zealand.
But Mr Norwell said the impact from foreign demand would be small given that REINZ estimated that overseas buyers only represented 3.8 per cent of all property buyers in New Zealand, including Australia which was exempt from the ban.