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NZ property values bounce back in November

NZ property values bounce back in November

By Rebecca Howard

Dec. 7 (BusinessDesk) - New Zealand's annual property value growth accelerated in November, coinciding with the warmer summer weather and recovering after several slow months, says state-owned valuer Quotable Value.

Property values rose at an annual pace of 6.4 percent in the QV house price index, and gained 3.6 percent in the three months ended Nov. 30 to a nationwide average value of $664,698, which is 60.4 percent above the previous market peak of late 2007, the state-owned valuer said. That annual pace picked up from a 3.9 percent gain in October and a 4.3 percent in September.

New Zealand's overheated housing market - considered a risk to financial stability - has slowed over the past year as Reserve Bank restrictions on more highly-leveraged mortgage lending and tighter credit criteria being demanded by banks made it more difficult for borrowers, even as low interest rates made it easier to service much larger debts. The slowdown was particularly evident in the country's largest city of Auckland.

However, "it appears the spring/summer upturn has finally arrived in the housing market" and the lift over the past three months was led by stronger growth in Wellington, Dunedin and other regional centres, QV national spokeswoman Andrea Rush said in a statement. Wellington region property values rose 9.8 percent on the year to an average $621,289 while Dunedin prices lifted 13 percent to $386,326.

Auckland and Christchurch values also lifted slightly over the past three months although they remained down on the year. Prices fell 0.5 percent in the Auckland Region versus the same month a year ago, the slowest annual rate since March 2011, but values rose 0.4 percent over the three-month period. The average value for the Auckland Region is at $1,045,741 and is now on average 91.4 percent higher than the previous peak of 2007. When adjusted for inflation, values are 59.7 percent above the 2007 peak.

While housing market sentiment had also been weighed down by the change in government as Prime Minister Jacinda Ardern looks to implement policy to restrict the sale of homes and property to foreign investors, QV Auckland senior consultant, James Steele downplayed the impact. "There’s been no significant change to the market dynamic since the change of government, values are holding in well-located areas while they have dropped back in some areas further out of the city centre," he said.

In Christchurch, values were down 1.5 percent on the year but up 0.2 percent in the three months ended Nov. 30. The average value of $493,899 has gained 30.2 percent since 2007.

Rush said activity and demand may continue to improve now the central bank has announced plans to dial back restrictions on the level of new bank lending to owner-occupiers with less than 20 percent deposit and leveraged residential property investors, citing recent moderation in the housing market as a good time to start moving.

However, "it's possible the usual slowdown over the Christmas period may mean we don't see the full impact of this until February and March next year."

In Hamilton, house values fell 0.1 percent in the three months to Nov. 30 but were 1.4 percent higher on the year at an average $544,050. The city was an early beneficiary of the slowdown in Auckland as investors shifted their focus further afield. However, "the market we observed over the past two years has now subsided and a regular market is now evident," said QV Hamilton registered valuer Andrew Jaques. Also, "it appears measures to slow investor activity are having the desired effect in the market."

Tauranga, another centre which saw house prices rise due to investor interest, saw values down 1 percent in the three-month period and for a 3.3 percent annual increase, pushing the average value to $687,310. Valuer David Hume said the "trend of a more stabilised market continues in the sub $700,000 bracket, with many in the industry describing it as a more normalised market."

In Hawkes Bay, values continued to gain strength, with Napier up 16 percent annually and 3.1 percent in the three months to an average $473,589 while Hastings posted an 18 percent annual gain and a 4 percent three-monthly rise to $442,876.



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