Slow growth trend takes hold
Thursday 11 January 2018
Property values around most of the country continued to increase in 2017 but the rate of growth has slowed to a crawl and sales have plummeted.
By Miriam Bell
According to the latest QV House Price Index, the nationwide average value rose by 6.6%, or $41,660, from $627,905 in December 2016 to $669,565 in December 2017.
In the final three months of 2017 the average national value increased by 3.6%.
At the same time, national sales volumes were down on 2016 for every month during the year and between February and October they were in excess of 20% below 2016 levels.
While sales picked up in November in a post-election late spring surge, they still finished the year 10% lower than November 2016 levels.
QV national spokesperson Andrea Rush says the general trend was a slow-down in the rate of value growth due to the LVR restrictions, tighter bank lending criteria, high prices and election-related uncertainty.
“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.”
This means that by October nationwide annual value growth had slowed to 3.9%, which was the lowest rate of growth seen in five years.
In the Auckland region annual value growth slowed to -0.6%, which was the slowest annual rate of growth seen since March 2011.
The former heavy-hitter saw value growth of just 0.4% over the 2017 year and of 1.2% over the last three months, which left the region’s average value at $1,051,762 in December.
In contrast, the Wellington region experienced value growth of 9.4% over the year and 3.6% over the last three months, which left its average value at $628,450 in December.
Looking at other markets around the country, there was a mixed bag of results with many areas, including Christchurch (down 0.1%), experiencing property value decreases over the year.
Napier (up 15.1%) saw the greatest percentage growth in values during the year, followed by Hastings and Whanganui.
However, the annual rate of nationwide value growth did recover to 6.4% in November and 6.6% in December and sales volumes for November lifted 21.0% higher than in October.
Rush says buyers delaying purchasing until the election result was decided and some buyers racing to purchase before the introduction of the new foreign buyers’ ban probably played a part in this.
“The slight easing in LVR restrictions by the Reserve Bank due this month is likely to help improve activity and demand in housing the market as we move through the summer months.”
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, she says.
“But the trend of lower rates of growth is likely to continue.
“Areas where investors were previously very active may continue to see values drop back where prices remain too high for first home buyers particularly in Auckland, Hamilton and surrounding districts.”
Some regional areas might continue to see stronger value growth than the main centres during the coming year, Rush adds.
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