NZ home values rise at slowest annual pace in six months in November

Thursday 1st December 2016

New Zealand residential property values increased at the slowest annual pace in six months in November, as tougher lending restrictions constrain buyers.

The average value of a New Zealand home rose 12 percent to $624,675 in November from a year earlier, the weakest annual growth rate since May, according to state-owned valuer Quotable Value.

New Zealand's housing market has been on a tear, bolstered by record migration and low interest rates, prompting the Reserve Bank to tighten up lending rules to reduce the risk to household balance sheets. It added new restrictions on lending to property investors with high loan-to-value ratios (LVRs) on Oct. 1 and RBNZ governor Graeme Wheeler noted yesterday that new tools such as debt-to-income (DTI) lending restrictions weren't needed at this stage as house price inflation had moderated.

"The latest round of LVR restrictions have led to a weaker-than-normal spring as a reduction in demand for investor housing stock has resulted in more subdued value growth," QV's national spokeswoman Andrea Rush said.

Growth in Auckland house values increased at a 13 percent annual pace in November, the slowest rate since January 2015, taking the average value for the Auckland region to $1.05 million. The rate of growth in Auckland peaked at 24.4 percent in November last year and has since slowed following the introduction of the tighter lending rules.

Wellington regional house values increased 21 percent to $565,631, although QV noted the market was slightly less buoyant as LVRs take effect. QV noted some sales had stalled during settlements as insurers refused to roll over cover to the new buyer, pending a building report, following the Kaikoura earthquake on Nov. 14.

In other urban centres, Hamilton values jumped 23 percent to $536,565, Tauranga rose 27 percent to $665,155, Dunedin lifted 11 percent to $341,604, and Christchurch edged up 4.3 percent to $501,229.

Napier values gained 21 percent to $408,509, Hastings increased 18 percent to $375,175, and Nelson advanced 15 percent to $489,338.

In the North Island, all areas posted an increase in residential property values over the past year.

In the South Island, the stand-out performer was the Queenstown Lakes District where values increased 32 percent to top $1 million. The Grey District was the only place to see values decrease over the past year, posting a 2.1 percent decline to $207,837.

BusinessDesk.co.nz

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