ASB economists say restrictions on non-resident house buying in NZ are "biting" and this supports their view that there will be only a "modest" uptick in house prices in the second half of this year.
ASB senior economist Mike Jones in an ASB Economic Weekly says "there has been a fair bit of attention" on the impact of lower mortgage rates on the housing market recently and talk of "an interest rate driven boost" to the market has become louder.
"We are more circumspect," he says.
"Yes, rock-bottom mortgage rates will provide a powerful boost to the housing market. But we expect recent housing policies targeting investor demand to exert a restraining influence."
He points to the latest Stats NZ property transfer figures that showed plummeting levels of offshore house buying in NZ.
"Restrictions on non-resident house buying in NZ are biting, particularly in Auckland and Queenstown-Lakes
"These regions are underperforming the broader, and increasingly patchy, nationwide housing market," he says.
"This supports our view for only a modest pick-up in house price inflation over the second half of the year, despite plunging mortgage rates."
Jones says there is evidence to suggest that the declining levels of overseas buying are impacting the broader housing market.
"...Areas that previously had a comparatively large non-resident buyer component, like Auckland and Queenstown-Lakes, have unsurprisingly experienced the largest falls. The same is true for Auckland data split by region.
"It’s probably no coincidence that the areas where foreign buyers were previously the most active have tended to experience the sharpest slowdowns in property prices."
He says people have previously pointed out that the overall level of nonresident buying is fairly low.
"This is certainly true. Over 80% of the market is transfers by residents.
"But, as our previous research suggests, it is often the marginal buyer that has a disproportionate impact on setting the price.
"And a clear reduction in non-resident housing market participation over the past year appears to be having an impact on parts of the NZ market."