House price growth in New Zealand is slowing but there is still some heat in the Whanganui market, according to the latest One Roof report.
One Roof editor Owen Vaughn said a lot more of the heat was being generated from first home buyers who now made up 25 per cent of the market compared to 18 per cent at this time last year.
Vaughan said the new figures showed that investors were in retreat and new home buyers were stepping in where investors were dropping away.
"Nationally, investors' share of new mortgage registrations in the three months to the end of June slipped from 22.5 per cent in the previous quarter to just 19 per cent - their lowest share since the national lockdown in April 2020 - while first-home buyers increased their share slightly from 26.5 per cent to 27.2 per cent," Vaughan said.
"It is likely that the 40 per cent deposit requirement for investment purchases has scared off a lot of buyers in this market, with the Government's tax hit on investors and recent rises in interest rates expected to have a further cooling effect."
The median house sale price in Whanganui has increased from $350,000 in June last year to $454,000 this month.
"The median price in June was up to $459,000, so that would seem to indicate that things are starting to slow," Vaughan said.
"You are likely to see that Whanganui will follow the slowing down that we're seeing in the main centres. There was a huge amount of growth in the last 12 months, especially from November last year until March this year but it appears to be tapering off a bit."
Wayne Shum, senior researcher at OneRoof's data partner Valocity, said despite the slowdown the main drivers of house price growth in New Zealand remained in place.
"June house sales were their highest for June in five years. Buyer demand is still high, listing volumes are low, and have been for some time, and there is a shortage of new homes in many of the main centres. More importantly, interest rates are still low," he said.
"However, there are headwinds facing the market, and these may accelerate the slowdown experienced in the last three months. The Reserve Bank has announced that it is halting its monetary stimulus programme and the market is now pricing in rate rises on the back of August's expected increase in the official cash rate.
"The Reserve Bank is also investigating the use of debt to income ratios as a tool to further dampen price growth, although it is unknown at this stage how or when this tool will be used."
Shum said pressure was building in the construction sector as well.
"Across New Zealand, a record high number of building consents were lodged over the past year - some 40,000. However, the lack of material and labour means higher building costs and delays," he said.
"Some projects may not commence as the result. It is too early [to] estimate how many of these consents will be converted to finished homes, or when they will arrive onto the market."
The One Roof report said it was cause for concern that interest rates were starting to rise, as it could have an adverse impact on investors and the purchasing power of first-home buyers.