Nz housing market hits the skids

NZ mortgage applications have plummeted over the last year, a sure sign of a slowing market...

Applications were down by more than a quarter last year - yet another sign that the property market has slowed. Credit reporting agency Veda Advantage said there was a 27 per cent decrease in housing loan applications last year compared with 2006.

The slowdown continued into January, when there were 14 per cent fewer applications than in January last year. Veda's figures also showed the largest decline in mortgage inquiries by age group was among 30 to 40-year-olds - classic first home buyers - with a 26 per cent drop.

Veda's country manager, John Roberts, commented: “The figures were evidence of the extent to which the brakes have been applied to the housing market”

Further evidence of a market slowdown came from other figures, including the following:

• The number of house sales hit a seven-year low in January at 5186, down from 7566 sales a year earlier. 
• The median sale price dropped to $340,000 in January from the peak price of $352,000 in November.
• Building consents for new houses fell last year to their lowest level in six years.

John Roberts, added: “The drop in home loan applications was caused by a slowdown in the housing market, and homeowners taking out longer fixed-term mortgages. Having said that, five-year fixed rates - around 9.3 per cent compared with 9.7 per cent for a two-year fixed rate - had gained in popularity. So therefore not as many people are going back to market to refinance because they've locked themselves in to longer deals."