Pace of property value gains almost halves in 2017 as market cools

QV's Andrea Rush says values are likely to hold in the main centres.

New Zealand property values rose at almost half the pace of the prior year in 2017 as tighter lending criteria, restrictions on highly leveraged loans, and electoral uncertainty took the wind out of the local housing market, Quotable Value says.

National residential property values rose 6.6 percent to $669,565 in calendar 2017, almost half the 12.5 percent gain of the prior year and well off the 14 percent increase in 2015. Still, state-owned valuer QV figures show property values were 62 percent higher than the 2007 peak as cheap finance and a mismatch between housing supply and demand pushed up sale prices for several years during a period of solid economic growth.

That momentum subsided last year as the prospect of easy credit started to dim, while at the same time banks tightened up lending criteria and the Reserve Bank's loan-to-value ratio restrictions for investors helped take the heat out of the market. A hotly contested general election added to the uncertainty for potential buyers, which saw a dearth of activity in the lead-up to the September vote, which ultimately saw a regime change.

"The frenzy in the market of the previous three years induced by high numbers of investors in the market subsided and we saw a return to more normal levels of activity in housing markets around the country," QV spokeswoman Andrea Rush said in a statement. "Low interest rates, relatively high net migration and lack of supply means market drivers remain and we are likely to see values hold for the most part during 2018 in the main centres, but the trend of lower rates of growth is likely to continue."

Auckland has been a major driver of the rapid asset price gains in recent years, with the country's biggest city feeling the effects of the mismatch between supply and demand most acutely.

That abated somewhat last year, with Auckland values rising 0.4 percent in the year, but at $1.05 million it's still almost twice the 2007 peak, compared to a 20 percent increase in consumer prices over the same period and keeping pace with a 107 percent increase in the stock market's benchmark NZX 50 Index.

Hamilton and Tauranga had been beneficiaries of efforts to rein in the Auckland market, however, their gains also slowed in 2017, with property values rising 1.6 percent to $543,446 in 2017 and 3.2 percent to $693,725 respectively.

Wellington values climbed 9.4 percent to $574,410, while Christchurch values slipped 0.1 percent to $494,247. Dunedin property values gained 10 percent to $354,133.

The South Island's Mackenzie district reported the biggest gain in values in 2017, rising 24.7 percent to $511,978, followed by a 24.1 percent gain in South Waikato to $229,124.

The Buller district on the South Island's West Coast reported the biggest decline in values, falling 3.6 percent to $179,147, followed by a 1.9 percent decline in Auckland's Waitakere values to $824,271.

(BusinessDesk)


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Markets go up and markets go down. Its all about supply demand and willing buyers and sellers.

No doubt the new Gumint will be claiming the credit and most of the citizens will think its all down to the Gumint. After all the Gumint wipes the bums of many of the citizens with all the "welfare" aka my tax money its sprays around like confetti.

Its a temporary pause in the market nothing more. Demand still exceeds supply. Will pick up again in a couple of years just like it has since Adam was a cowboy.

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I'd be happy to take a bet with you you're wrong.

There is always demand for property, however buyers need to be able to afford the participate. While there will continue to be price rises in a few rich spots, historically the market price increases are lead from bottom.

As the supply of credit is contracting, so will jobs that are driven by this, with price levels to follow shortly.

Maybe you have only experienced the good times?

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Exactly, and as we can see from the latest BF&T report, prices and sales are well, well down Y-on-Y in the less affluent 'burbs. Only 2 suburbs that saw rises in December (and very mediocre ones at that...) were over a mill average price. We're a long way yet from seeing the majority of Kiwi's being able to afford a basic house in Auckland at rational mortgage levels with higher interest rates.

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We tend to agree.... the underlying dynamics is still the same. The whole overtone of "slower pace" is artificially created by politicians to create a perception of "calming the market"; as long as nothing is done to address the supply and demand issues, especially in some of Auckland's choice suburbs, the facade will crack under demand pressure.... caveat is, if you are going to play the game, you should have the holding power.

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Meanwhile, back in reality where no asset class goes up forever, especially at nose-bleed valuations as immigration starts to fall off and new regulations haven't even started to bite yet...

http://www.news.com.au/finance/real-estate/sydney-nsw/sellers-slash-big-...

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Indeed, 'tis but a flesh wound!

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Seven year cycle controled by the major banks just like the 2008 GFC when the lending brakes were applied.

The major banks freed up lending and by 2015 house prices more than doubled.

Time in the market throughout history proves a doubling in house prices every seven years.

Sydney has capital gains tax, large stamp duty tax, banned foriegn buyers. House prices have rocketed up far higher than Auckland.

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Certainly the NZ data does show this 7 year cycle, people don't seem to understand that property is cyclical. You mention Sydney as an example, almost every other major city has a major issue with property price increases despite taxation & restrictions on foreign ownership.

A lot of people blame the banks, I blame local government - take Auckland is the perfect example, too much red tape, adds massive cost of time & funds to add to supply of housing. Most folks also understand property as an investment, they have more faith in this market vs investing in shares.

I don't see this changing much at all so based on that I reckon the cycle will continue - unless there is a MAJOR global recession.

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While its true Local Government are slow in keeping up with demand and market changes, this is no different to most other big business.

The elephant in the room is central government and the banks however, who control the macro settings like immigration levels, foreign investment criteria and lending. You'll find in most countries they work along side one another, for the interests of the banksters investors.

We are but pawns in someone elses game, which is all about redistributing more wealth to themselves.

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Just goes to show that we should add capital gains tax and stamp duty, and drop company and individual income taxes significantly.

We'd encourage productive investment in business while not impacting prices unduly, as you note. What's not for a *real* businessperson to like?

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We will ring fence the economy and tax the working class so they never make a cent again on a house.

Point Chev will be excluded in the tax regime otherwise everyone has to be equal to someone living in a car or earning equivalent to the dole.

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