Palmerston North house prices continue to climb

Cloudy 12°C ‘‘We will stabilise eventually, but I don’t see that happening any time soon.’’ Real Estate Institute of New Zealand Manawatu spokesman Andy Stewart

The value of Palmerston North houses is growing at a faster rate than the national average, and prices are unlikely to simmer down even as lending restrictions cool the Auckland and Wellington markets.

Palmerston North houses hit an average value of $357,752 in June, 13.2 per cent higher than a year earlier, according to Quotable Value. The national growth rate was 8.1 per cent.

City houses are worth 20 per cent more than at the 2007 market peak that came just before a downturn in prices.

Real Estate Institute of New Zealand Manawatu spokesman Andy Stewart said Palmerston North had been behind the eightball on housing price rises for a long time.

The city was still catching up on the growth that other places, such as Auckland and Wellington, had already experienced, he said.

Lending restrictions adjusted late last year were designed to curtail risky lending to homeowners, and take some heat out of the property market.

‘‘The brakes had to come on in Auckland, really, but we’re going to carry on our merry way. We will stabilise eventually, but I don’t see that happening any time soon.’’

Palmerston North real estate agents have reported a growing number of Wellington buyers in the past year, and a smaller, but still significant, number of Aucklanders had been snapping up the relatively cheaper houses in Manawatu.

Stewart said there wouldn’t be a slowdown in Auckland and Wellington investors coming into the Palmerston North market, even as the prices level off in their home cities.

‘‘We’re still going to see a lot of investors looking to Palmerston North.’’

The national average value reached $639,051, which is 54.2 per cent above the previous market peak in late 2007.

QV national spokeswoman Andrea Rush said while house prices continued to ramp up in the regions and most main centres, the big two, Auckland and Wellington, were showing signs of slowing down.

The average house was now worth $609,552 in the Wellington region, an 18 per cent increase on the previous 12 months.

June also brought Auckland’s slowest year-on-year growth in house prices since September 2012, and sales numbers plummeted 30 per cent from the same time in 2016.

‘‘High prices coupled with banks’ stricter lending criteria are making it increasingly difficult for anyone but cash buyers or those with higher levels of equity to buy property,’’ she said.

‘‘It has also become much more difficult for developers to gain finance to build new homes, which is now leading to a slowdown in building activity in [Auckland].’’

Showers, 12°C