Banks, Mortgage Advisers and Real Estate agents are still busy, but it seems housing market activity has peaked for the time being. At the residential auctions monitored by interest.co.nz a total of 369 properties were offered for sale in the week of April 10-16. Out of those 189 properties were sold which is almost 50% of properties offered. The success rate in auction has declined continuously since it hit 73% in the week of March 6-12. There may be many reasons for the same, but it seems introduction of latest loan to value ratios and proposed Tax changes to housing has dampened the sentiment to some extent. Some of the buyers are adopting wait and watch policy for the time being.

Till recently there was fear of missing out, properties were snapped up and prices soared. According to Tony Alexander this fear has started to be replaced by fear of overpaying. Buyers have become more cautious. According to Tony, it occurs when buyers become concerned about the housing market keep rising, and worried that they may buy at the peak of the market.

Alexander said that in his survey a gross proportion of agents selected worries about prices falling as the biggest concern of buyers. “In last month’s survey a gross 16 per cent of agents expressed this concern – a result about the same as for all months since November. But this month a gross 25 per cent of agents said this fear of prices falling was of prime concern.

But Mortgage Supply Company director David Windler said he wasn’t seeing increased hesitancy from buyers worried they would pay too much for a property.

“Concern about overpaying is always in existence, especially for first-home buyers where the key component is affordability…savvy investors will be monitoring the market closely for any shifts to make sure they are not paying too much.”

He said it was too early to tell what the impact of Government policy changes might be so it was not possible to assume that house prices would fall.

Median prices nationwide increased by 24.3 per cent to a new record high of $826,300 in March, up from $665,000 a year ago, according to the Real Estate Institute.

In the past also, we have observed that Property market slows down when Government announces measures to check rapidly rising prices. After few months, of wait and watch, buyers return, and market becomes active again. So, lets see with rock bottom interest rates and rents being so high, how long slowdown lasts. -by Ravi Mehta from Professional Financial Solutions