House prices will increase for some time yet despite the introduction of loan-to-value speed limits at the end of the month, QV research director Jonno Ingerson says.
QV has just released its latest monthly property value index, which shows that nationwide values have risen 8.5% over the past year and 2.9% over the past three months.
But, as has been the case for a while now, the picture was quite different for regional New Zealand, compared to Auckland and Christchurch.
Ingerson said: “Auckland and Canterbury are still driving the national increase in values, with the other main cities seeing limited growth. The provincial centres have tended to be more variable, although for much of the year many have been slowly increasing. In the last couple of months however values have flattened or even declined in many provincial areas. It is not yet clear if that is likely to continue or was just a temporary slowdown.”
He said Auckland and Christchurch were being driven by a lack of supply, so LVR restrictions would only have a limited impact.
From the end of this month, banks will be required to keep their proportion of lending to borrowers with a deposit of less than 20% to less than 10% of their total lending.
“The LVR speed limits imposed by the Reserve Bank were in part put in place to slow down the rapid growth in property values. They will definitely limit the number of first home buyers and investors who will usually require loans of more than 80% of the property's value. However the rapid increase in values in Auckland and Canterbury in particular is also due to a lack of supply rather than just high demand from potential buyers. So while the LVR limits may have some dampening effect on values, we should still expect them to increase for some time yet.”
In Auckland, the highest value increases were seen in old Auckland City, Waitakere and North Shore; however, Manukau has also crept up again. All four areas have increased between 3.3%-3.6% over the past three months.
Overall, values across Auckland are 13.1% above last year, with Waitakere and North Shore seeing the highest annual increases, both above 14%. Auckland City is close behind at 13.8%.
Hamilton values are still up, but growth is flattening compared to earlier in the year. Values are up 0.9% over the past three months, and 3.9% over the past year.
Valuer Richard Allen said: “We are increasingly seeing buyers showing little interest in properties below $340,000, with first-home buyers even setting their expectations higher than what we have seen in the past.”
Growth in the Wellington area is still limited, with some areas experiencing a small decrease in value over the past three months. Overall, Wellington is up 2.8% over last year.
Christchurch reported an annual increase of 11.4%. Valuer Daryl Taggart said: “Buyers are being cautious and not necessarily rushing in as they might have been previously. They appear to be waiting and looking out for good quality properties instead.”
Dunedin has continued to show limited gains in the back end of the year. Values have increased 0.3% over the past three months, leaving it 3.4% above last year.
The provincial centres aren’t seeing as much growth as the main centres, however most areas are still up on last year. Whangarei had the most annual growth, at 1.7%.