New Zealand property value growth slowed to an annual pace of 3.9 percent in October as inflated Auckland house prices fell for the first time in six years.
The QV house price index posted the lowest rate of annual growth since June 2012 last month, state-owned valuer Quotable Value said. Values increased 0.9 percent to a national average $646,807 in the three months ended Oct. 31, more than double the previous market peak in late 2007.
The slowdown was once again led by the Auckland region property market, where values dropped 0.6 percent in the year. The average house in the region is valued at $1.04 million, up 91 percent on 2007's peak or 59 percent on an inflation-adjusted basis.
New Zealand's house price growth has calmed since banks introduced tighter lending conditions and started indicating interest rates would start rising, while the Reserve Bank's curbs on riskier mortgage loans have excluded many first-home buyers who struggle to cobble together a sufficient deposit on increasingly expensive houses. Yesterday, the new Labour-led government announced it would ban foreigners buying existing housing by early next year.
QV national spokeswoman Andrea Rush said the frenzy induced by high numbers of investors in the market had subsided, and there has been a return to more normal levels of activity in housing market around the country.
"The CoreLogic Buyer Classification data is showing the nationwide share of sales to investors has dropped back to 38.5 percent from a high of 40.5 percent in 2014, in favour of first home buyers whose share has risen to 21.6 percent," Rush said.
In most of Auckland, values have been flat or falling, although areas such as North Shore-Onewa, Papakura and Franklin are still seeing gains. QV Auckland senior consultant James Steele said that while the rate of value growth remains subdued, values are relatively stable and there is still strong competition for well-presented and located homes.
"Listings levels have also not experienced the usual spring surge and only those who need to sell appear to be listing properties," Steele said.
Wellington region property values rose 0.6 percent to $610,579 in the three months ended Oct. 31 for a 9.2 percent annual gain, while Wellington city values were up 2 percent in the quarter and 10 percent in the year to an average $738,742. General manager David Nagel said the market is at a crossroads, with a continued shortage of properties for purchase making it a good time to sell.
Christchurch city values softened 0.9 percent to $490,429 in the rolling three-month period for an annual drop of 1.6 percent, while Dunedin property values rose 2.3 percent to $382,402 on a three-monthly basis for an annual increase of 12 percent.
In Hamilton, house values rose 0.4 percent in the three months to Oct. 31 and were 1.1 percent higher than a year earlier at an average $543,046. The city was an early beneficiary of the slowdown in Auckland as investors shifted their focus further afield. The frenzy seen in 2015 and early 2016 has now subsided, with auctions less popular, fewer listings and properties staying on the market longer as bank lending tightens further, Hamilton property consultant Andrew Jaques said.
Tauranga, another centre which saw house prices rise due to investor interest, saw values down 0.6 percent in the quarter and up 5.4 percent annually, pushing the average value to $687,241. Valuer David Hume said the market was no longer seeing 2015 and 2016's "frantic buying".
In Hawkes Bay, values continued to gain strength, with Napier up 18 percent annually and 3.9 percent in the quarter to an average $467,330 while Hastings posted 19 percent annual gains and 3 percent quarterly rises to $436,467.
"We are now seeing a return to business as usual after a wait and see attitude before the election result was finalised," Hawkes Bay property consultant Rachael Walker said. "A shortage of listings had been an issue in recent months however we are now seeing a slight increase in properties coming on to the market as we move into the summer marketing period."