Quarterly House Price Growth Slows

Quarterly House Price Growth Slows

The growth in New Zealand house prices is slowing, as indicated by the quarterly house price index (HPI) figures released by Quotable Value (QV) today.

Growth for the quarter ending June 2004 slowed to 1.9%, down from 5% for the quarter ending March 2004. Although quarterly growth slowed, the annual growth rate to June 2004 of 22% was still an increase from the 15.5% annual growth rate to June 2003.

Further evidence of the slowing housing market is indicated by declining quarterly growth rates across the country. In the March 2004 quarter, seven areas experienced growth in excess of 4%, while in the June 2004 quarter Napier City, with an increase of 6.1% was the only area to record growth in excess of 4%, with Tauranga (3.1%) and Dunedin (3.1%) the only areas to exceed 3%.

Nelson became one of the first areas in the past two years to record a quarterly decline in its HPI of 2.5%. “The decrease in Nelson is as a result of the phenomenal but unsustainable growth they have experienced over the past two years,” said QV Valuations’ spokesman Blue Hancock.

Despite the decline in quarterly growth rates, many areas still exceeded 20% growth for the year ended June 2004; Napier (30.8%), Dunedin (29.5%), Tauranga (28.2%), Christchurch (27.8%), Invercargill (25.2%), Waitakere City (24.5%), and Auckland City (20.7%).

“Continued annual house price growth at current levels is not likely to be sustainable in the medium term, given increasing interest rates, and the downward trend in net migration,” said Mr. Hancock.

The QV House Price Index has now risen every quarter for the past three years, but how long it will continue to grow is unknown, Mr. Hancock said.

“The June quarter has traditionally shown the least growth or greatest decline of any of the quarters over the previous four years, but the next quarter should still see modest growth for most areas.”

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