New Zealand property values increased at the slowest annual pace in six months in March as lower Christchurch valuations, high-debt lending restrictions and interest rate hikes weighed on the market.
House values rose at an 8.8 percent annual pace in March, the slowest annual gain since September when values rose 8.4 percent, according to state agency Quotable Value. Residential values rose 0.1 percent in the past three months, down from a 1.8 percent pace in the three months through February, as they were dented by a 1.5 percent decline in Christchurch values.
The Reserve Bank imposed loan-to-value mortgage lending restrictions in October to cool the market on concern rapidly accelerating house prices in Auckland and Christchurch could lead to an asset price bubble and cause financial instability. Governor Graeme Wheeler starting hiking interest rates last month to head off inflation and is expected to raise the rate further this month.
"The LVR speed limits and the Reserve Bank signalling further interest rate hikes is likely to be contributing to a levelling off in the growth of property values in Auckland and for the first time in more than two years we are seeing a decrease in some areas of that market," said QV spokeswoman Andrea Rush.
Values in Auckland increased at a 14.3 annual pace in March, and are up 0.9 percent over the past three months. Values fell in some areas such as Auckland South which declined 0.5 percent in the past three months, QV said.
In Wellington, house values rose at a 2.8 percent annual pace, while Christchurch values increased at an 8.3 percent annual pace.
Nationwide, values are 12.6 percent above the previous market peak of late 2007, QV said.