New Zealand property values rose at a 9.2 percent annual pace in November, and continue to be driven by a shortage of houses in Auckland and Christchurch, although there appears to be some slowdown in buyer interest, according to state valuer Quotable Value.
Property values in the Auckland area rose at an annual 15.2 percent pace, ahead of the 14.5 percent pace last month. In Christchurch, values increased at a 12.4 percent annual pace, up from 11.8 percent last month. The national pace accelerated from 8.9 percent annual growth in October.
Rapidly accelerating house prices in the country's two biggest cities have raised concern about an asset bubble emerging and prompted the nation's central bank to introduce restrictions on high-debt mortgage lending on Oct. 1. Property market activity normally slows down at Christmas and the impact of the high loan-to-value lending restrictions should become clear by March, QV said today.
"While it is still too early to see any definitive effect on values from the LVR changes, there are signs of changes in the market," QV research director Jonno Ingerson said in the statement. "There are reports of fewer potential buyers at open homes, longer marketing periods and fewer auctions selling on the day."
The Reserve Bank, which is expected to keep interest rates on hold at a record low 2.5 percent this Thursday, has signalled rates are set to rise next year and further increases are likely should lending limits fail to stem rapidly rising house prices. Population expansion in Auckland is outpacing housing supply while Christchurch is being rebuilt following a series of earthquakes.
In other major centres, house values in the Wellington area rose at a 3 percent annual pace while Hamilton increased 5.5 percent and Tauranga advanced 3.5 percent.
Most provincial centres are still experiencing growth although it is limited in some areas, QV said. Gisborne is leading the provinces in the North Island with an annual increase of 2.9 percent while in the South Island, Southland prices rose at an annual 4.4 percent pace and in Gore prices accelerated 3.9 percent.
Nationwide values increased 2.5 percent over the three months through November, compared with a 2.7 percent pace in the three months through October. Prices are now 11 percent above the previous market peak of late 2007, the agency said.