Auckland market softening - QV

QV’s monthly House Price Index shows that, in November, the average residential property value in the Auckland region rose to $931,807 – which is up from $918,153 in October.

Values in the Auckland market increased by 24.4% year on year and 6.5% over the past three months.

This has left the average value 70.5% higher than the 2007 market peak.

Once adjusted for inflation, values went up by 23.9% over the past year and are 44.9% higher than in 2007.

But QV national spokesperson Andrea Rush said that while Auckland values were still increasing, it was at a much slower rate than last month.

“It appears new rules to curb investors, along with restrictions on the capital flow out of China, have led to an easing in the market.”

QV Auckland valuer James Wilson agreed the government’s tax rules and the Reserve Bank’s LVR restrictions could be contributing to the “softening” of the Auckland market.

He said investors were adopting a “wait and see” approach to determine how the market would react to the recent measures.

The decrease in rental yields achievable in the city also appeared to be fuelling the more cautious mentality of buyers, he said.
 
“So far we are not seeing any drastic price easing in the statistics, but we can definitely say that activity is well down on previous months.”

“For example, the number of houses being sold at auction continues to be well down on earlier this year with some agencies reporting clearance rates as low as 30%, when they had been regularly around 85%.”

But Wilson said whether this would correlate to values decreasing across the board remained to be seen.

“However, anecdotal evidence suggests that value levels among some categories of housing, in particular investment housing stock may have fallen.”

Meanwhile, the QV data shows that, in November, nationwide residential property values hit $555,729, which is up on $552,345 in October.

Nationwide values have increased 15.0% over the past year, which is the fastest rate of increase since February 2006.

They rose 4.0% over the past three months and are now 34.1% above the 2007 market peak.

Once adjusted for inflation, values went up by 14.5% over the past year and are 14.0% higher than in 2007.

Rush said the Wellington market is showing a definite upward tick in values – as is Dunedin, thanks to increased investor interest.

The Christchurch market was steady, but showing more activity than it did over the winter months, she said.

“Increased interest and activity by investors or movers in regional markets around the country is leading to value rises in places with little growth over many years - including Rotorua, Taupo, the Far North and Invercargill.”

However, QV valuers in Hamilton and Tauranga said that, after strong years for their respective markets, some heat appeared to be coming out of both markets.

Record migration levels and ongoing low interest rates mean it will be interesting to see how these factors impact on the market after Christmas, Rush added.