House prices soften in the cities
House prices in New Zealand’s biggest cities are starting to look shakier, new data shows.
QV has released its latest market update, which shows six of the 15 cities surveyed recorded a drop in prices in the three months to July. Auckland led the decline, down 2.6 per cent year-on-year and 0.8 per cent over the quarter. On the North Shore, values were down 4.1 per cent over the year.
Tauranga was down 0.3 per cent, Hamilton down 0.1 per cent, Rotorua and Queenstown Lakes down 1.5 per cent, and Napier down 0.2 per cent in three months.
In central Wellington, values were down 0.5 per cent but the rest of the region helped to push prices up 0.9 per cent over the quarter overall. Christchurch’s prices were flat. Hastings and Palmerston North had the largest quarterly price increase, up 2.5 per cent and 2.4 per cent, respectively.
‘‘The regions that continue to see the strongest value growth, such as the Bay of Plenty, Hutt Valley and Porirua, are generally those offering more affordable property in areas where the local economy provides plenty of job prospects within a commutable distance,’’ QV general manager David Nagel said.
Corelogic, which provides the data for QV, described the result as neutral. Head of research Nick Goodall said demand was constrained by tighter credit. He said borrowers were having their income tightly scrutinised.
Outside the main centres, the most growth was coming in areas where average values were low.
Whanganui, where prices are up 21.7 per cent over the year, Gisborne (16.1 per cent) and Invercargill (13.6 per cent) all experienced an increase in the annual rate of growth at the end of July and had an average value below $365,000.
Meanwhile, those cities with an average value above $540,000, generally saw the annual growth rate fall away. Goodall said: ‘‘As more responsible lending standards in banking are now well embedded in the industry, the areas requiring larger mortgages are seeing the greatest slow-down.
‘‘As expected, growth in some of the regional areas is running out of steam, after a strong growth phase of almost four years. Rotorua, Whanganui, Hastings, Napier, Queenstown and Gisborne have all seen property values increase by more than 60 per cent over that time,’’ Goodall said.
Nagel said there were still opportunities for prices to increase in some parts of New Zealand.
Central Auckland’s property prices are now 90 per cent higher on average than the 2007 peak. But Christchurch’s are just 31.3 per cent up. ‘‘It’s regions such as these that still have plenty of scope for growth in the coming years, as they continue to attract buyers seeking more affordable property.’’