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NZ property values rise at slower pace in January, suggesting increased buyer caution, QV says

New Zealand property values increased at a slower pace in January, suggesting restrictions on high debt lending and looming interest rate rises may have prompted buyer caution.

Values increased at a 9.6 percent annual pace in January, lagging December's 10 percent rate, according to state valuer Quotable Value. Nationwide values increased 0.3 percent in January from December, when they increased 1.3 percent, the agency said.

The Reserve Bank introduced loan-to-value mortgage lending restrictions on Oct. 1 on concern rapidly accelerating house prices in Auckland and Christchurch may lead to an asset bubble and cause financial instability. The central bank is expected to start hiking interest rates from next month to cool the economy as inflation accelerates.

"Property value growth has slowed down in the first month of the year," QV research director Jonno Ingerson said in the statement. "While this is the first month that values appear to have slowed, and generally we would wait for subsequent months before claiming a trend, the timing does align to the LVR speed limits.

"The predicted increase in mortgage interest rates in the near future are likely to also slow down values further," Ingerson said. "This may in fact already be affecting buyer confidence and contributing to the slowing we are seeing."

Values in Auckland increased at a 14.5 percent annual pace in January while Christchurch values rose 12 percent, compared with an 11.7 percent gain for main urban areas.

In provincial areas, values are variable with some experiencing growth, others remaining stable and in some cases a decline, QV said. Nationwide, prices are 12.8 percent above the previous market peak of late 2007, the agency said.


RAW DATA: 10th Feb Full Data (pdf)950.81 KB

Comments and questions

I highly recommend people read the full QV release as the press (particularly one unnamed Auckland paper) is already "spinning" this data to make it look more rosy than it really is. If you read the full release you get a detailed picture including that values in central Auckland are now decreasing and growth elsewhere in the city has slowed considerably (turning into decline is my guess).
They also confirm the anecdotal evidence many of us have been seeing that auctions are failing and "for negotiation" listings are increasing, which is an indicator that the heat is gone from the market.
It has been a while coming given the extraordinarily loose credit conditions in the markets globally, but the house price correction is now upon us and will accelerate when interest rates rise next month.
Auckland prices are still c25-30% above the previous peak in 2007 (which staggers belief as 2007 was a massive global asset bubble and Auckland incomes certainly haven't risen 25% in the past 5 years...) so they have a long way to fall; I would still comfortably predict a 10% downward movement over the next 12 months as interest rates bite hard on over-leveraged households.
QV also seemed surprised by the speed of the reversal in Auckland price growth, given they (amongst other people who don't bother researching things properly) believed there was a supply demand imbalance. Hilarious as it's been obvious that it was just a credit fuelled bubble (confirmed when the census data was released), and it's now starting to pop...
Good luck property "investors". You have a rough ride ahead of you.

Hi Wakey Wakey, what is your view on the impact of the current net migration inflow into NZ on supply/demand equation and hence house prices? cheers

People that want or need to own property are not all "investors". Now what staggers belief is the price of a Xero share .......

One months statistics are a nonsense and mean nothing.

Just like shares, averages or medians go up and down from month to month.

It's the trend that matters, and trends in the property market don't show up for at least 5-6 months.

We will know the trend better by mid year at the earliest.