By David Hargreaves
The latest monthly sales figures from the Real Estate Institute will have been a source of some quiet satisfaction, tinged with relief, for the folk at the Reserve Bank.
The October REINZ figures give a snapshot (and the most timely one among the various sales figures available) of New Zealand's housing market in the first month since the new 40% deposit rules for investors officially kicked in - though the rules were unofficially applied 'in spirit' by the banks straight after being announced by the RBNZ on July 19.
The rises in median values that were seen in some areas in the latest month are a red herring and as much as anything merely demonstrate a change in the mix of houses being sold.
In general terms, if the housing market is easing off the sales volumes will dry up first and then this will later be followed by an easing of price pressure.
The telling thing to look at in the latest figures is the top and mid-to-bottom of the market sales figures.
Nationwide there were 2726 houses sold in the $600,000 and over bracket in October, compared with 2621 in the same month a year ago - that's a 4% increase in the latest month versus the same month in 2015.
In the under $600,000 bracket, there were 4001 houses sold, down some 23.3% on the 5217 sold for under $600,000 a year ago.
Now, yes, you do have to be a bit careful with those figures, in the sense that obviously with rising house prices over the course of the year, then so the number of houses in the upper price bracket would tend to rise.
Clearly, however, this 'bracket creep' would not come close to explaining a fall of as much as 23.3% in the lower end houses.
The Reserve Bank these days compiles detailed statistics every month on the categories of mortgage borrower, be they first home buyers, other owner-occupiers, or investors.
The figures for October are not out yet, but the September figures showed a marked fall off in both the amounts of money borrowed in total by investors and by the number of investors borrowing.
Conversely the numbers of first home buyers and owner-occupiers pretty much held up.
If we say that the first home buyer figures are about where they were, and we presume that most first home buyers are at the lower end of the market, then this all suggests that the fall-off in sales the mid-to-lower price bracket is being driven by a slackening of investor buying - exactly what the RBNZ would hope to see with the 40% deposit limit.
The big, big question though is whether that impact will be a long-lasting one.
The RBNZ has expressed great caution since imposing these latest limits. Indeed its public positioning on the matter has tended, I think, to suggest a lack of confidence that the measures will have a lasting impact.
The other thing though (and which might explain the reluctance to claim success on the 40% deposit measure) is that the central bank is currently involved in what might be termed a marketing campaign to try to sell the Government on the idea of debt-to-income ratios. At this stage the Government doesn't seem to be buying, which could be hugely problematic for the RBNZ if house prices start to gain momentum again early next year - and my bet is that they will.
For now though we do appear to have a pre-Christmas pause in the housing market.
The next key factor will be whether Christmas is good for the RBNZ - and they get a present of nice shiny new DTIs to slip into the macro-prudential tool kit. I still doubt it.