Is the housing market actually slowing down?

PHOTO: The New Zealand property market is in for many changes in 2022. FILE

Data from December shows fewer home buyers and more sellers, it could be the start of slowdown or just a Christmas speed bump, Justin Giovannetti writes.

The beginning of the end of the great house price boom? Some real estate experts are warning that prices in the country’s superheated housing market are starting to plateau after a record-breaking year. Similar predictions have been made in recent years—less than two years ago many were warning of a monumental crash—only for records to continue toppling over. This time they say it’s different. The head of the Real Estate Institute of NZ told Newshub that with interest rates climbing, lending criteria tightening and tax changes hitting investors, growing “headwinds” mean buyers are falling out of the market.

Property market closes on a high after strong year | REINZ

It could be a perfect storm hitting the country’s housing sector. For all those issues, there’s also the recent changes to the country’s credit rules, which have hammered first-time buyers. Experts warned RNZ that it’s now nearly impossible to secure a mortgage with a less than 20% deposit. A different rule change by the Reserve Bank last year means that only 10% of bank lending can now go to those with less than 20% deposits, which presents a de facto cap on first-time buyers. As The Bulletin reported earlier this week, some banks have begun cancelling pre-approved mortgages because of borrowers’ Christmas shopping at Kmart or habit of visiting parents on weekends.