The growth in house prices has slowed again in the past month, with the annual increase to February moderating to 9.3% in February from 9.6% in January and the peak of 10% in the year to December.
The news from Government valuer Quotable Value that the Reserve Bank's 'speed limits' on high loan-to-value lending are clearly having an impact on the housing market, follows hot on the heels of latest figures from Auckland's biggest real estate firm Barfoot & Thompson showing a big slowing in market activity.
QV said the average residential property price around the country was $468,484 in February, up from $467,499 as of January and $466,022 in December.
In the hot Auckland market the average price was $695,499, compared with $695,215 in January and $693,549 in December. And while the latest month's figure gave an annual increase of 14% in Auckland, that is down from 14.5% in January and from 15.4% in December.
Both the B&T and QV figures would tend to suggest that the impact so far of the RBNZ's moves on LVRs has been perhaps stronger than economists and housing market participants had expected.
As recently as January QV said there was no apparent impact on values yet from the Reserve Bank's restrictions on banks' low equity home loans and QV expected that there wouldn't be in Auckland, although impact was expected in the rest of the country.
In releasing QV's latest figures today, national spokesperson Andrea Rush said that last month was "the very first sign" that the steady upward trajectory on the New Zealand, Auckland and Christchurch values over the past couple of years was starting to level off.
"This is a clear indication the LVR caps are taking effect and they appear to have led to a reduction in the rate of value growth in the residential property market."
Here is QV's regional breakdown of the latest figures:
Auckland
Property growth in the Super City region continues to rise with values increasing year on year by 14% and 1.5% in the past three months.
North West Manukau saw the highest year on year increase with values up 17.2% and 3.7% and others South Auckland suburbs also saw the largest increases in the past three months including Papakura, up 4.5%, Franklin up 4.4% and Manukau Central up 4.1%.
Residential property values in Rodney North also climbed 3.9% in the past three months while prices in the old Auckland City remained steady with a 0.2% increase. Waitakere City is still a top performer up 17% year on year but growth has flattened off with values 0.2% lower this month than in January.
QV Valuer Bruce Wiggins said, “The big thing in Auckland at the moment is land. We’re starting to see people invest money into attaining land where high density or development potential exists ahead of the implementation of the city’s new unitary plan.”
“We’ve seen examples of this in Otahuhu, the inner North Shore and East Coast Bays. For example a property with development potential purchased in Castor Bay in February 2013 for $1.69 million reportedly resold recently for $1.99 million in the same condition. So effectively the appreciation of value is in the land,” Wiggins said.”
Hamilton and Tauranga
Values in Hamilton city are also growing with an increase of 1.7% over the past three months, and 5.4% over the past year. Values are 0.4% above the 2007 peak. The Tauranga city market has increased 0.5% in the past three months and values are up 3.4% year on year. The market there remains at 8.5% below the peak of 2007.
QV Valuer Richard Allen said, “House values are continuing to edge up incrementally in Hamilton.”
“Most of the buyer activity is in the upper end of the market in suburbs such as Flagstaff, Rototuna, Harrowfield, Huntington and Woodstock,” he said.
“Sales activity in areas popular with first home buyers has been a little more subdued due to the LVR rules starting to bite and any increase in the OCR in early March is likely to dampen things a little more.”
Wellington
The Wellington market is continuing on the same gentle upward trajectory with house prices in the region increasing 2.9% since February last year, and increase of 1.3% in the last three months.
Wellington West and East values showed small 1.4% increases over the past three months, Wellington North was up 1.6%, Wellington Central and South rose 0.9%.
Values in Upper Hutt were steady at a 0.3% rise over the past three months and Lower Hutt was up 1.2% for the same period.
QV Valuer, Kerry Buckeridge said, “We have seen a significant increase in the number of properties for sale and buyers now have a lot more choice.”
“Certain properties such as well presented, inner city character two bedroom properties are selling quickly for seriously good prices, while others are taking longer to sell,” he said.
“Developers are still reasonably confident about the central city and inner suburbs with a number of good quality apartment and townhouse developments either in the pipeline or underway as these are in high demand by inner city professionals and are commanding good rentals.”
Christchurch and Dunedin
There are further indications that the rate of growth in the Christchurch market is also slowing reflecting the national trend.
Values in the Christchurch city are up 11.1% year on year and 1.7% over the past three months. The Selwyn District has increased just 1.1% in the past three months, but is up 9.9% since February last year and 32% since the previous peak of 2007.
Banks Peninsula is up 5.4% since this time last year and has risen 2.4% in the past three months however values there are up just 3.6% since the 2007 peak reflecting the nationwide downturn in coastal property as well as the impact of the earthquakes.
QV Valuer Daryl Taggart said “Rather than the post earthquake panic where people in many cases were paying top dollar, the growth in the market is starting to slow although there are still a number of buyers and the good properties are still selling well.”
“There is continued interest from investors as a result of the good rental returns - one aspect of this is a high priced rental market in furnished homes for short term stays particularly for people having earthquake repairs done on their homes,” he said.
“Bare sections are still selling and builders are still busy putting up houses.”
Property values in Dunedin City are 1.7% above this time last year and there’s been a 1.8% increase in Dunedin South over the past three months.
QV Valuer Duncan Jack said “Dunedin value levels are remaining steady with a lower number of listings than usual.”
“Demand remains strong for well priced properties although there is a degree of buyer caution,” he said.
Provincial centres
Values in the provincial centres are variable with some remaining stable, some up and some down. In the North Island, the South Wairarapa District was up 4.9% over the past year while the Taupo District decreased by 4.9% in the same period.
In the South Island, most areas saw an increase in annual growth including Nelson which was up 3.2% and neighbouring Tasman District was up 3.8%. In Central Otago, property values increased by 7.2%, Ashburton was up 6.3% and Timaru increased 5.5%.
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5 Comments
No sign of things cooling down in the mean streets of Kohimarama. It seems that the best parts of Auckland are still selling like hot cakes to foreigners with stacks of QE cash.
http://www.qv.co.nz/suburb/area-profile/kohimarama-auckland/2920
Yeah I think about it all the time. Someone will probably come and say that QE is localised to the financial sector but it's obviously not. Wealthy foreigners can see the writing on the wall just as well as you and I. They follow Max Keiser, Steve Keen, Jim Rickards, Gerald Celente and other economists. They know there's way more paper, derivatives, debt or whatever than real assets to back it all up. The cracks are showing and its going to get nasty which is why people are flocking to properties in tier 1 cities.
On the flip side, my partner and I are both scientists, we have good salaries +80K (good for a scientist) but house prices have been moving faster than our ability to save and in areas where we'd want to live the house price to income ratio is 12+. We missed the boat in 2009 and now we're putting off having children beyond our mid thirties. We face an uncertain future. I wonder how many people our age are in a similar place and what sort of demographic problems this will cause in the future.
Being a baby boomer with 30 years experience in the area of property ownership two things come to mind today;
1. Just how lucky I was to buy my first house in 1984 and then move up the ladder in the late 80's and early 90's. My current home is worth 20 times the cost of my first home. That certainly has given me advantages over many others as I have been able to borrow heavily against my home to get ahead. I have had so many advantages over my children and any future grandchildren in terms of timing and opportunities.
2. Interest rates. We certainly have been on emergency rates for some years which a lot of borrowers have forgotten about. 30 years of experience tells me that when interest rates go up prices come down. It is basic human nature. People will not want to keep borrowing at current levels as it will eat into their budgets more than it does today. And banks will lend many people less than they will today as interest costs will rise and make the banks more nervous.
We are certainly going into interesting times and unchartered waters for many.
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