House sales volumes have collapsed by a quarter in the past year, prompting the Real Estate Institute to make a desperate call for an end to the Reserve Bank's stringent lending restrictions for first-time buyers.

The Real Estate Institute this morning released July national house data, showing how national house sale volumes fell 24.5 per cent last month compared to July last year.

"The LVR restrictions have done their job of slowing the market, but now it seems they are acting as a handbrake, which is why REINZ is calling for LVRs to be reviewed for first-time buyers," said chief executive Bindi Norwell.

"The number of sales across New Zealand has dropped significantly in comparison to the same time last year. A key reason for this is that the two biggest hurdles to purchasing a house right now are access to finance as the banks continue to tighten their lending criteria and LVR restrictions. This creates an intimidating barrier to entry to the real estate market, particularly for those saving for their first home," Norwell said.


"No matter where we are in the country, agents tell us that there are a good number of buyers out there, but that these two issues are impacting both investors and first-time buyers alike. When you throw in an election, winter, school holidays and one of the wettest Julys on record, it's little wonder the number of properties sold last month fell so significantly," Norwell said.

But in keeping the Official Cash Rate steady this week, the Reserve Bank reiterated its LVR stance and shows no sign of relaxing the policy to restrict bank lending.

"House price inflation continues to moderate due to loan-to-value ratio restrictions, affordability constraints, and a tightening in credit conditions. This moderation is expected to persist, although there remains a risk of resurgence in prices given continued strong population growth and resource constraints in the construction sector," the Reserve Bank said yesterday.

REINZ data showed Auckland's median sale price was $830,000, down 1.2 per cent in the past year. Auckland sales from June to July dropped 8.8 per cent, compared to national sales between the two months, down 10.1 per cent from June to July but 24.5 per cent annually.

Sales volumes dropped in many areas from June to July: by 15.4 per cent in Waikato, 6.1 per cent in Bay of Plenty, 13.6 per cent in Gisborne, 11.4 per cent in Hawke's Bay, 1.2 per cent in Taranaki, 21.2 per cent in Wellington, 14.1 per cent in Canterbury, 25.8 per cent in Westland, 11.7 per cent in Otago and 12.7 per cent in Southland.

The REINZ release follows Barfoot & Thompson's July data this month, which also showed dropping Auckland and Northland sales volumes. There were just 747 unconditional sales last month with commissions paid, down on the 855 in June and the 886 in May. The average residential sales price fell from $913,606 in June to $908,319 in July, the agency said.

Barfoot said this was the "continued muting of the Auckland housing market influenced by seasonal market trends, school holidays and the upcoming election." That deterred some vendors from putting homes on the market.

QV said on August 1 that Auckland residential property values rose only 5.3 per cent in the last year, the slowest annual rate of growth since May 2012.