New Zealand house values shrank in August as the market cooled in winter, according to state-owned valuer Quotable Value.
National residential property values dropped 1.6 percent in the three months through August to $672,504, although they were still 4.8 percent higher on an annual basis, QV said. That’s a turnaround from the 1.6 percent gain in values for the three months through July, and slower annual increase than July’s 6.4 percent.
New Zealand’s property market has been cooling since banks introduced tighter lending conditions and started indicating interest rates would start rising while at the same time, the Reserve Bank’s curbs on riskier mortgage loans excluded many first-home buyers who struggled to put together a big enough deposit on what have increasingly expensive houses.
Still, things have started turning around as the prospect of higher rates has yet to eventuate and the central bank eased its lending restrictions, with Auckland realtor Barfoot & Thompson noting a pick-up in new listings last month.
“The market is currently experiencing polarising forces with key market drivers such as low interest rates, population growth and lack of supply, being countered by tightening credit conditions and a range of government policy initiatives aimed at cooling the market,” said QV general manager David Nagel. “Spring is going to be a very interesting time for the residential property market as we see what unfolds when a few more buyers and sellers enter the market.”
Nagel said buyer behaviour had changed, with increased demand for more affordable, smaller units and apartments in main centres, and he predicted such properties “will attract even more demand in future years, particularly in Auckland and Wellington City.”
In Auckland, values rose 0.7 percent annually but dropped 0.4 percent in the three-month period to an average $1.05 million for the region.
Auckland valuer James Steele said fewer property investors had opened up space for first-time buyers. Sellers have been waiting until winter was over to sell, but Steele said it was unlikely there would be an oversupply of listings in spring as there are still few external pressures on buyers to sell.
Wellington property values continued to gain, up 8.5 percent in the year and 0.9 percent in the rolling three-month period to $656,676. QV Wellington senior consultant David Cornford said the combination of low listings and low interest rates had kept values up, and ever-increasing rents were pushing people to buy property. Cornford said more properties will likely come into the market in spring, but he’s anticipating “more subdued value growth in coming years as affordability challenges put the brakes on.”
Hamilton and Tauranga were early beneficiaries of the early slowdown in Auckland as buyers, primarily investors, shifted their focus further afield. Hamilton property values rose 0.3 percent in the three months through August to $559,190 and were 2.7 percent higher than a year earlier. Tauranga values rose 0.7 percent to $705,383 on a three-monthly basis and increased 1.6 percent in the year.
Values in Christchurch rose 0.3 percent annually and fell 0.2 percent in the August period to $494,476. Dunedin values continued to strengthen, up 11 percent in the year and 1.7 percent in the three months to an average $415,888.