Values moderation ahead

Wednesday 2 May 2018

Investor activity is dropping and Auckland’s market is flat-lining but QV’s latest data shows that nationwide property values are still creeping up.

By Miriam Bell

Nationwide property values rose by just 1.1% over the past three months and, once adjusted for inflation, by 6.4% over the year to April, according to the latest monthly QV House Price Index.

This leaves the nationwide average value at $678,856 in April, as compared to $677,618 in March and $631,147 in April 2017.

QV’s data also shows that values in the country’s biggest market, Auckland, dropped by 0.3% over the past three months and, once adjusted for inflation, by 0.3% over the year to April.

This leaves Auckland’s average value at $1,051,687 in April, as compared to $1,055,992 in March and $1,043,830 in April 2017.

QV general manager David Nagel says nationwide values are rising at a moderate pace with many regional centres continuing to see steady increases.

But he says the rate of growth is continuing to slow, plateau or even drop slightly in the main centres.

Over the past three months, values dropped in Wellington, were flat in Christchurch and went up only slightly in Hamilton, Tauranga and Dunedin.

In contrast, the Hawkes Bay region has been seeing significant value growth in many of its markets.

The Napier market was leading the way, with its average values up by 3.4% over the past three months and by 17.6% year-on-year.

Invercargill has also seen strong value growth, as have a number of provincial markets in both the North and South Island.

Nagel says one reason for this is the continued trend of people seeking a lifestyle change away from the cities and purchasing better valued properties in the regions, particularly those that are within commutable distances of major centres.

“Another reason for the slowdown in value growth can be partly attributed to the usual seasonal slowdown in activity as we approach the winter months.

“But also the fact that many people, particularly investors, are not expecting significant capital growth in the coming months so are less active in the market.”

However, it seems that while regional markets are currently producing strong results, there are signs of weakness ahead.

CoreLogic head of research Nick Goodall says they are starting to see population growth slow in the regional centres.

Further, with extended value growth not matched by wage growth, property is becoming less affordable, especially given a tightening of lending credit policies, he says.

“Property transactions are likely to remain constrained for at least the rest of the year as finance remains harder to acquire.

“However, with strong fundamentals underpinning the market, we’re unlikely to see a significant drop in either volumes or values across our main centres.”

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