Property values plateau as turnover dries up in face of lending curbs – QV

New Zealand property values stalled in the three months through April as tighter credit conditions and restrictions on riskier mortgage lending has seen dwindling sales numbers, says state-owned valuer Quotable Value.

The QV house price index showed the nationwide average property value was $631,147 in April, up 11 percent from a year earlier in what's the smallest annual gain since July 2015. Over the three months ended April 30, national property values were unchanged due in large part to a 0.4 percent decline in Auckland property values, which had been the lynchpin for the country's overheated housing market in recent years.

By contrast, Wellington property values continued their march higher after a protracted lull, up 3.4 percent to $602,230 in the three months ended April 30, rounding out a 21 percent annual increase. The capital city is experiencing a lot of first home buyers turning to satellite centres in the Hutt Valley and Porirua with a higher number of listings.

"Nationwide quarterly value growth has plateaued over the past three months as the housing market continues to be constrained by the latest round of LVR (loan-to-value ratio) restrictions," QV spokeswoman Andrea Rush said. Nationwide sales volumes have continued to be relatively weak and despite sales picking up in March as compared to February, they were at the lowest level for March since 2014."

New Zealand's property market has posed a dilemma for policymakers as a shortage of housing in the country's biggest city coincided with surging population growth, pushing up prices and raising affordability questions for first-home buyers. At the same time, globally low inflation meant the Reserve Bank was hindered from hiking interest rates and instead used new macro-prudential tools to restrict highly leveraged mortgage lending.

Lending curbs targeting Auckland investors prompted those buyers to look further afield, pushing up prices in the surrounding areas such as Waikato and the Bay of Plenty, and today's data show property values rose at a slower pace in Tauranga, increasing 0.9 percent over the three months through April to $678,643 for an annual increase of 18 percent. Hamilton values rose 1.4 percent to $538,832 in the three-month period for an annual gain of 14 percent.

Christchurch property values shrank 0.3 percent in the three months ended April 30 to $495,855 for an annual increase of 1.4 percent and Dunedin values rose 3.5 percent to $371,739 for an annual gain of 17 percent.

(BusinessDesk)