Wednesday 14th January 2015 |
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New Zealand property values rose 4.9 percent last year, less than half the pace in 2013, as low-equity loan restrictions, rising interest rates, and the uncertainty of a general election saw sales volumes drop.
National average property values rose to $488,674 in December 2014 from $466,022 the same month a year earlier, according to state owned valuer Quotable Value, and slowing from 2013's 10 percent gain. Auckland continued to drive the higher property values, rising 9.8 percent in December 2014 to $761,858, slowing from the 15 percent rate of growth in 2013, while Christchurch value growth slowed to 3.2 percent in 2014 from a pace of 13 percent a year earlier.
"Once the election was over and interest rates rises were put on hold, there was a surge of new listings and activity with the coming of spring and values began to tick upwards again in most of the main centres," QV spokeswoman Andrea Rush said. "The return of relatively low interest rates offered by the banks with cash incentives coupled with record migration levels has since led to a strong reacceleration of values in Auckland."
The Auckland property market has been a headache for New Zealand's Reserve Bank as prices continue to climb with rising net migration driving demand, and a lack of supply after several years of under-investment in the wake of the finance company collapse in the latter half of the 2000s when the country's last property bubble burst.
Property values in Wellington rose 1.4 percent in 2014, slowing from an increase of 3.1 percent in 2013, while Dunedin values edged up 0.7 percent, slowing from a 3.8 percent pace a year earlier.
QV said a number of provincial centres were hit harder by the central bank's loan-to-value ratio restrictions, which limited the level of lending banks could make with deposits of less than 20 percent.
CoreLogic director of research Jonno Ingerson said sales volumes fell in 2014 from a year earlier, continuing a trend that started in early 2013 as activity struggles to recover from the global financial crisis in 2008.
"Despite talk of rapidly increasing values, it is worth bearing in mind that sales activity was still very low," Ingerson said.
Auckland's biggest realtor, Barfoot & Thompson, this month said it had a decade low 2,500 houses on its books at the end of December.
Ingerson said that lack of listings will likely constrain the market this year, though turnover will probably remain buoyant in the first few months of 2015.
"New listing activity typically picks up from mid-January, but unless there are far more than we saw last year then supply is likely to remain less than demand," he said.
Ingerson predicts Auckland property values will continue to rise this year due to the housing shortage and upbeat consumer confidence, and while other major centres might report modest increases, smaller centres will likely remain steady.
BusinessDesk.co.nz
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