The following article is an excerpt reproduced from the QV website (www.qv.co.nz)
The latest monthly QV House Price Index shows that nationwide residential property values for October have increased 12.7% over the past year, which is the slowest rate since May. Values rose by 3.3% over the past three months and are now 50.2% above the previous market peak of late 2007. When adjusted for inflation the nationwide annual increase drops slightly to 12.4% and values are now 27.4% above the 2007 peak. The average value nationwide is $622,309.
The Auckland market has increased 13.8% year on year which is the slowest rate since March 2015. Home Values in the Super City rose by 5.3% over the past three months and are now 91.3% higher than the previous peak of 2007. When adjusted for inflation values rose 13.6% over the past year and are 62.1% above the 2007 peak. The average value for the Auckland Region is $1,045,207.
QV National Spokesperson Andrea Rush said, “The QV House Price Index is now showing a slight tick to the right which reflects an easing of 1.6% in the annual rate of growth over the past month as the latest round of LVR restrictions begin to take effect. Sales volumes are down by around 12.0% on the same period last year and mortgage approval rates are also down. Home values continue to rise faster in the Wellington Region than the Auckland Region, and the housing market in the Capital appears largely unaffected by the new LVR restrictions, particularly at the more affordable end of the market in areas such as the Hutt Valley, Porirua and the Kapiti Coast.
Auckland, Tauranga and Hamilton home values are continuing to rise, just at a slightly slower pace than they were prior to the new LVR measures being introduced in late July. The Dunedin market also continues to see good levels of activity and demand, while investors are less active in the Christchurch market and home values there continue to show only moderate value growth. The new build market remains strong across the country as the new LVR restrictions for investors do not apply for new homes.”
“Less established investors appears to be having difficulty raising finance with the new 40% deposit requirement, while recent CoreLogic Buyer Classification Data shows that 34% of investors with five or more properties do not need to raise a mortgage so are not affected by the new LVR rules. Those investors shut out of more expensive markets appear to be turning their sights to more affordable markets in relatively close proximity to North Island main centres such as the Western Bay of Plenty, Whangarei, Rotorua and the Waikato District and all of these areas continue to see very strong value growth.”
Auckland
Home values across the Auckland region are still rising but for most places at a slightly slower rate than prior to the new LVR restrictions being announced in late July. The former Auckland City Council central suburbs have increased by 12.0% over the past year and 3.9% over the past three months .The average value there is now $1,209,199. Values in the former North Shore City suburbs also rose 13.5% year on year and a strong 5.2% over the past three months and the average value there is now $1,220,550. Manukau suburbs were up by 15.6% year on year and a still strong 5.5% over the past three months, the average value there is now $906,128. Waitakere City values were up by 13.5% year on year and are bucking the trend, accelerating by 7.1% over the past three months. The average value in the West is now $837,300.
QV Auckland General Manager, Jan O’Donoghue said, “We have seen a surge of listings in Auckland over the past month after a wet start to spring. However the LVR changes continue to have an impact in that we continue to see a lower level of activity and demand in the market. Values continue to rise and there continues to be strength in the $1.5 million upper bracket of the market in particular. As well as the new build market which continues to see good value growth, particularly in new developments – where we are seeing as one property is sold in a development, the sale prices achieved tend to increase as more properties are sold in the development.
“Demand has eased back from previous highs at the low-end of the market now that there are not as many investors active in the Auckland market due to the new LVRs. It appears that new investors and ‘Mum and Dad’ investors are the ones most effected as they are reliant on higher loan to equity ratios, and so tend to be more affected by the LVR changes than well-established investors. There are reports of investors’ having more difficulty raising the extra finance through banks, following the new LVR changes. There are still properties selling but it is not as easy as it was prior to the new changes coming into play.”