Sharechat Logo

Pace of NZ property value gains almost halves in 2017 as housing market cools

Thursday 11th January 2018

Text too small?

New Zealand property values rose at almost half the pace of the prior year in 2017 as tighter lending criteria, restrictions on highly leveraged loans, and electoral uncertainty took the wind out of the local housing market, Quotable Value says. 

National residential property values rose 6.6 percent to $669,565 in calendar 2017, almost half the 12.5 percent gain of the prior year and well off the 14 percent increase in 2015. Still, state-owned valuer QV figures show property values were 62 percent higher than the 2007 peak as cheap finance and a mismatch between housing supply and demand pushed up sale prices for several years during a period of solid economic growth. 

That momentum subsided last year as the prospect of easy credit started to dim, while at the same time banks tightened up lending criteria and the Reserve Bank's loan-to-value ratio restrictions for investors helped take the heat out of the market. A hotly contested general election added to the uncertainty for potential buyers, which saw a dearth of activity in the lead-up to the September vote, which ultimately saw a regime change. 

"The frenzy in the market of the previous three years induced by high numbers of investors in the market subsided and we saw a return to more normal levels of activity in housing markets around the country," QV spokeswoman Andrea Rush said in a statement. "Low interest rates, relatively high net migration and lack of supply means market drivers remain and we are likely to see values hold for the most part during 2018 in the main centres, but the trend of lower rates of growth is likely to continue." 

Auckland has been a major driver of the rapid asset price gains in recent years, with the country's biggest city feeling the effects of the mismatch between supply and demand most acutely. 

That abated somewhat last year, with Auckland values rising 0.4 percent in the year, but at $1.05 million it's still almost twice the 2007 peak, compared to a 20 percent increase in consumer prices over the same period and keeping pace with a 107 percent increase in the stock market's benchmark NZX 50 Index. 

Hamilton and Tauranga had been beneficiaries of efforts to rein in the Auckland market, however, their gains also slowed in 2017, with property values rising 1.6 percent to $543,446 in 2017 and 3.2 percent to $693,725 respectively. 

Wellington values climbed 9.4 percent to $574,410, while Christchurch values slipped 0.1 percent to $494,247. Dunedin property values gained 10 percent to $354,133. 

The South Island's Mackenzie district reported the biggest gain in values in 2017, rising 24.7 percent to $511,978, followed by a 24.1 percent gain in South Waikato to $229,124. 

The Buller district on the South Island's West Coast reported the biggest decline in values, falling 3.6 percent to $179,147, followed by a 1.9 percent decline in Auckland's Waitakere values to $824,271. 

(BusinessDesk)

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

MARKET CLOSE: NZ shares rise after bumpy week, led by NZ Refining, Synlait while Port of Tauranga, A2 drop
NZ dollar heads for 0.7% weekly decline as trade jitters weigh on markets
Mining industry says no more projects the size of Te Kuha, but smaller ones waiting
Goodman Fielder seeks ComCom permission to buy Yoplait rights in NZ
RBNZ's Orr tipped to stand pat and could signal hikes might take even longer
Consistency across port reporting would boost transparency, deputy Auditor-General says
Fletcher's Ross says no change to B+I provisions, won't comment on delays in Chch airport hotel
SeaDragon auditor PwC struggles to find evidence supporting asset valuations; withholds opinion
Education Ministry's leaky school claim against Carter Holt about a year away
NZ may produce record volumes of milk this season, Rabobank says

IRG See IRG research reports