The Real Estate Institute of New Zealand (REINZ) has released its house price index for January, which posted a 1.3% monthly seasonally-adjusted rise at the national level, with prices rising by 4.9% year-on-year.
However, prices in Auckland posted a 1.3% season-adjusted decline in January, and have fallen quite sharply over over recent months (see next chart).
Auckland sales volumes have also fallen sharply (see next chart).
On 1 October 2015, the New Zealand Government implemented new tax rules and residential requirements, which:
- requires non-residents and New Zealanders buying and selling any property other than their main home to provide a New Zealand IRD [tax file] number;
- requires non-residents to have a New Zealand bank account to get a New Zealand IRD number; and
- introduces a new “bright line” test to tax gains from residential property sold within two years of purchase, unless it’s the seller’s main home, inherited or transferred in a relationship property settlement.
From 1 November, the RBNZ’s new rules on Auckland residential investor loans also came in to force requiring the bulk of these loans to have a loan-to-value ratio (LVR) of no more than 70%. Banks are also now required to put residential property investment loans in a separate asset class and hold more capital against them.
Both measures appear to be weighing on Auckland housing.
