Lending limits tipped to be eased to help home buyers as Auckland market cools

It looks like good news for New Zealanders thinking about buying a home, with the Reserve Bank expected to announce some loosening of loan to value restrictions when it releases its latest financial stability report tomorrow.

The Auckland housing market has cooled dramatically after years of overheated prices, and less than a quarter of houses are now selling at auctions some weeks.

At the moment only 15 per cent of new lending can be to borrowers with less than 20 per cent deposit.

The central bank is expected to ease lending restrictions to help out buyers.

"I think we'll see a little bit of a tweak. And I think that's a good thing. I don't think it's going to fire the market up," economist Cameron Bagrie told 1 NEWS. 

While still a popular way to sell, houses being passed in at auction is becoming a trend.

"What we're seeing now is on average round about 30 per cent, whereas 12 months ago it most probably would have been around 50 per cent and in the peak days we're as high as 80, 85 per cent under the hammer," said Peter Thompson, director of real estate agency Barfoot and Thompson.

Homes.co.nz data scientist Tom Lintern says a few years ago in Auckland prices were going up and up.

"But the last 18 months or so they've been flat or if not slightly decreasing. And this translates into poorer auction performance which traditionally work better in a warmer market."

The days of packed Auckland auction rooms and skyrocketing prices are gone, but economist Cameron Bagrie says the market is actually working quite well.

"And we're looking for stabilisation as opposed to anything on either side," he said. 

Across the Tasman, house sales have plummeted in Sydney and Melbourne.

"Historical correlation tells us at some stage you could start to see a bit of weakness out of Melbourne and Sydney flow into the likes of Auckland. But there's also some pretty big differences to be mindful of as well," Mr Bagrie said. 

Barfoot and Thompson says sellers need to be realistic about the state of the market.

"If you want to sell your property, price it right," Mr Thompson said.