Market returning to normal

Thursday 1 June 2017

Any doubt that New Zealand’s housing market is taking the pace down a notch is confirmed by May’s QV data which shows annual value growth dropping significantly.

By Miriam Bell

Annual value growth has now dropped to below 10% - both nationally and in Auckland, according to the latest QV House Price Index.

National property values rose by 0.4% over the past three months and, once adjusted for inflation, by 7.4% year-on-year, leaving the national average at $634,018.

That is the slowest rate of annual growth in two years.

In Auckland, value growth remained flat, with the average value coming in at $1,044,561 in May as compared to $1,045,362 in April.

The region’s values increased by just 0.1% over the past three months and, once adjusted for inflation, by 7% year-on-year.

This rate of growth is the slowest annual rate Auckland has seen since November 2014 – and the state of play in the city’s market reflects the more sedate times.

QV Auckland homevalue manager James Steele said the Auckland market was currently seeing a return to more “normal” market conditions.

“There are more properties listed for sale on the market - but there is also demand and properties are selling.

“But some of the heat has come out of the market and buyers are being pickier about what they buy.

“Properties with undesirable features or maintenance issues are sitting on the market for longer and many sellers may have to accept a lower price than they would have achieved mid-last year.”

He added that entry level homes in South Auckland suburbs like Mangere, Papakura and Manurewa are now sold mostly to first home buyers.

“Investors are no longer very active in this part of the market.”

However, QV’s data also indicates that other major centres besides Auckland appear to be seeing a degree of normalisation, while regional centres are currently booming.

QV national spokesperson Andrea Rush said that nationwide value growth continues to ease back.

This is due to lower demand in the housing market caused by the latest round of LVRs and tougher lending criteria from the banks as the market heads into the winter period, she said.

“Sales volumes are lower than they were this time last year, particularly in Auckland, and its possible market activity may now remain more subdued until after the election.”

Auckland, Hamilton and Christchurch are all relatively flat markets, while value growth in Wellington and Dunedin is also starting to ease back a little.

“Values in Tauranga are showing stronger quarterly growth than last month,” Rush said.

“But it appears much of the frenzy has come out of the housing market there and have returned to more normal levels of activity and demand.”

Meanwhile, many regional centres around the country are now seeing the strongest value growth.

For example, Rotorua values were up by 23.9% year-on-year, while Whangarei values increased by 19.4% year-on-year and Napier values rose by 19.3% year-on-year.

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