New Zealand property values climbed 10 percent last year due to the shortage of housing in Auckland and Christchurch, though Reserve Bank restrictions on low equity mortgage lending will probably start biting though the first half of this year, according to state-owned valuer Quotable Value.
National property values rose 3 percent in the final three months of 2013, and are now 12.5 percent above the previous market peak in late 2007, QV said in a statement. Auckland property values climbed 15 percent and Christchurch values rose 13 percent in the year, pacing the national gain.
Research director Jonno Ingerson said sales volumes grew month on month until October, when the Reserve Bank's restrictions on low loan-to-value ratio lending came into force, but that the activity was still less than the boom between 2003 and 2007.
Ingerson expects the loan restrictions will have an impact on the market "for at least the first half of 2014" and have already led to a decline in the number of new listings.
The Reserve Bank imposed the restrictions as bubbling housing markets in Auckland and Christchurch, which typically account for half the nation's property turnover, raised fears about the nation's financial stability if there was a sharp correction.
QV's Ingerson said the other factor likely to weigh on property market will be the expected interest rate increase, which will push up the cost of servicing mortgages.
"Nationwide values are likely to increase only modestly this year, but that will probably be as a result of everywhere outside of Auckland slowing, while the Auckland market itself will continue to increase," he said.
Property values in Wellington increased at an annual pace of 3.1 percent in 2013 and Dunedin was up 3.8 percent.
(BusinessDesk)
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Property values rose 10% last year, LVR limits likely to bite this year, QV says
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