FACT: The greatest ever NZ housing boom is over!

PHOTO: Housing Boom. FILE

According to STUFF there is enough evidence to show the housing market boom is over, and rising mortgage rates are the key driver behind that, Westpac economists say.

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The turnaround began late last year, the bank said. That was when the Real Estate Institute’s house price index first revealed a fall in prices, led by Auckland.

In January, the index recorded its second month of decline with a 0.9 per cent drop and this time it involved the whole country.

Westpac acting chief economist Michael Gordon said prices were still up 20 per cent on a year ago, reflecting rapid price gains over most of last year, but that measure was coming down fast.

House sales had declined to below pre-pandemic levels, listings had increased, and the latest Reserve Bank figures showed new mortgage lending fell substantially in December, he said.

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The slowdown in the market reflected a combination of factors, including interest rates rises, tighter loan-to-value ratios, tightened loan-to-value restrictions (LVRS) from November, and new, prescriptive lending rules.

It was hard to separate out how much each factor contributed to the slowdown, but the bigger question was to what extent their effects would endure, Gordon said.