House prices drop as growth slows
Property prices are falling, and those who need to sell or who have problem properties are feeling the pain.
Quotable Value (QV) has released its latest house price index, which shows that nationwide residential property values fell 1.6 per cent over the three months to August.
In Auckland, prices were down 0.4 per cent in the quarter, while New Plymouth was down 0.3 per cent, Christchurch was down 0.2 per cent, and Queenstown was down 1 per cent.
On an annual basis, prices are up 4.8 per cent on the same time a year ago.
That annual rate is slowing – at the same time two years ago, the annual rate of growth was 14.6 per cent. In July this year, the annual rate was running at 5.2 per cent.
‘‘Affordability constraints continue to change buyer behaviour. We’re seeing an increase in demand for more affordable two-bedroom semi-detached units as well as apartments, particularly in our main centres,’’ QV general manager David Nagel said.
‘‘With population growth projected to continue to rise, I’d anticipate these types of properties will attract even more demand in future years, particularly in Auckland and Wellington City.’’
Nagel said small provincial towns were seeing strong growth, and the southern part of the country, including Dunedin and Invercargill, was also increasing in price.
‘‘Overall, we’re anticipating value growth to remain flat or steadily grow across most regions,’’ he said.
‘‘The market is experiencing polarising forces, with key market drivers such as low interest rates, population growth and lack of supply being countered by tightening credit conditions and a range of government policy initiatives aimed at cooling the market. Spring is going to be a very interesting time ... as we see what unfolds when a few more buyers and sellers enter the market.’’
In Auckland, QV senior consultant James Steele said a drop in the number of investors in the market had opened space for first-home buyers.
‘‘We are continuing to see a high proportion of properties come to market as price by negotiation as opposed to auction. With less demand, sellers are adjusting expectations and are more open to negotiation in order to get their property sold. In general this has caused prices to soften, with the biggest variation from the peak shown in properties which are poorly presented or have other issues.’’
The premiums paid before the latest round of loan-to-value ratio (LVR) restrictions were introduced were no longer seen, he said.
‘‘As expected, we have seen minor fluctuations in price, with some downward pressure through the winter months coming from those who needed to sell. At this stage, any larger downward pressure on property prices is likely to come from regulatory change or wider economic risks.’’
In Wellington, QV senior consultant David Cornford said rising rents were pushing buyers into the market.
‘‘Two-bedroom, semi-detached units are selling particularly well, as they provide a more affordable option for young professionals or families. New builds or one- and two-bedroom modern apartments [are] also proving popular.’’
QV Christchurch consultant Daryl Taggart said he expected activity to increase over the warmer months.