New rules hit Rotorua home sales

VACANCY: House sales are sluggish in Rotorua.PHOTO/FILE

Local house sales continue to be sluggish as loan deposit regulations bite first-home buyers.

Monthly house sales in Rotorua during October were down on the previous month. Seventy sold last month, compared to 76 in September and 78 in August.

Land sales in the city for October showed improvement, with six lots being sold compared to three lots sold each in September, August and July, according to McDowell Professionals.

Sales in Eastern Bay of Plenty and Taupo also showed declines, with 44 houses sold in EBOP last month (compared to 54 in September), and 38 sold in Taupo in October, compared to 44 the previous month, according to REINZ.

McDowell Professionals managing director Ian McDowell said the figures showed first-home buyers were finding it difficult to arrange the initial 20 per cent minimum deposit to secure a home.

The overall sales trend was definitely down among first-home buyers, he said. "Land sales are slightly up which is good but overall sales have been slow because the first-home buyer has effectively been taken out of the market.

"The loan-to-value ratio (LVR) was affecting people buying their first home."

LVRs are a measure of how much banks will lend on a residential property and the borrower's ability to repay the loan within their means.

Mr McDowell said while there were ways to help find a deposit using equity from family members there was still the onus of keeping up mortgage payments.

Lending agencies were setting tough conditions to guarantee income and to support mortgage repayments, he said.

Mr McDowell said nothing could be read into the increase in land sales as the lots were "scattered all over the city".

"I guess it is good people are still looking to build [rather] than buy a house."

Rotorua District Council had granted 1249 building consent applications this year. Last year 1686 building consents were approved compared to 1703 in 2011.

House Sales: (October/September)
- Rotorua: 70/76
- Eastern Bay of Plenty country: 44/54
- Taupo: 38/44
Figs REINZ, and Professionals Rotorua