Auckland house sales gain in May

The number of sales climbed 18% to 792 in May from a month earlier, though it was down 2.7% from the same month in 2009, according to Barfoot & Thompson, Auckland's biggest real estate firm. The average sale price increased 0.3% to $542,806.  

The Reserve Bank is expected to hike the Official Cash Rate 25 basis points to 2.75% next week as it begins to restore monetary policy to more normal settings. The housing market has been in a state of hold this year after the government flagged changes to tighten tax rules.

Finance Minister Bill English unveiled the changes in last month's Budget, which removed investors' ability to claim depreciation on buildings and closed tax loopholes on loss attributing qualifying companies (LAQCs).  

"With inventory on the market at reasonable levels, net migration beginning to wane, more restrictive credit conditions, the RBNZ about to begin tightening monetary policy and the ever-present issues with affordability, we see a number of headwinds for the market," said Philip Borkin, economist at Goldman Sachs JBWere.