House Price Growth Slows
New Zealand property values increased at the slowest annual pace in seven month in April. The annual increase to April moderated to 8.4% well-down on the peak in December of 10%. The latest annual rate of growth for April compares with 8.8% in March, 9.3% in February, 9.6% in January and December’s peak of 10%.
The national asking price of new listings eased in April. The seasonally adjusted asking price fell by 1.4% to $477,460. Auckland once again recorded a new record asking price of $685,426. Auckland prices are still up 13.9% on last year, which is a slightly lower growth rate than for the year to March (14.3%).
Across New Zealand 10 regions saw asking price increases. Tauranga has seen values increase 2.1% in the past three months and 4.8% year on year. The Wellington region is up 0.6% over the last three months. Christchurch has seen a decrease of 1% in property values. The majority of values in the provincial centres still remain below the previous highs of 2007. Nelson (5.3%) and New Plymouth (5.9%) are provincial centres that are up on sales values since 2007 peaks.
The government introduced the loan to value ratio on high debt lending to cool the housing market, last October. The figures released by the government valuer, Quotable Value, suggest that the Reserve Banks LVR lending limits are having an impact.
The Reserve Bank Deputy Governor Grant Spencer announced on May 8th that the ‘earliest’ timeframe to remove restrictions on low deposit lending will be later this year. Spencer said, “Before removing the LVRs, however, we will want to be confident that the housing market is responding to interest rate increases, and that immigration pressures are not causing a resurgence of house price pressures.”
Factors which lead to the introduction of the LVR, include rising immigration pressures on housing market levels. Current migration rates will see the country on track for an annual growth in net migration of 40,000, which would be close to record levels. Projected job losses and slowing economic growth predictions are expected with the news the Australian Federal Government will continue fiscal tightening, in an attempt to return to surplus. This may result in an increase in Trans-Tasman migration flows. Another influence on the slowdown is the Reserve Bank interest rate hike in March.
ASB economist Christina Leung said, “We expect nation-wide house prices will rise 5% in calendar 2014 – with Auckland still up 9% – which suggests the risks lie more with 2015 given that Auckland is the market getting the most focus from the RBNZ.
“We expect that migration flows will peak in the second half of this year.”
Filed under: REAL ESTATE