House-price falls ‘trickle down’

Falling house prices are becoming a feature of more parts of the New Zealand housing market.

Quotable Value (QV) has reported a significant increase in the number of properties being listed for sale in September – but value growth remained modest.

Five of the 15 main centres reported a drop in values in the September quarter: Auckland, New Plymouth, Napier, Christchurch and Queenstown-Lakes.

That’s up from four the month before and three in July.

Among the smaller regions, Hauraki prices fell 6.4 per cent, Kawerau 5.1 per cent, and Otorohanga 4 per cent.

Invercargill had the fastest quarterly house price growth, up 4.7 per cent.

Napier had previously been one of the areas of strongest growth. In the year to September last year, its prices were up 18.4 per cent. Queenstown, too, has been a strong performer. This time last year, it was up 12.6 per cent on an annual basis.

Annual price growth across the country is now at 4.6 per cent, down from 4.8 per cent in August.

The nationwide average value is now $676,427. When adjusted for inflation, the nationwide annual increase drops slightly to 3.1 per cent.

‘‘While listings have increased significantly across most areas, quarterly value growth remains modest due to a lack of new market drivers,’’ QV general manager David Nagel said.

‘‘Supply has been constrained which, on top of stable interest rates, is keeping values at their current levels.

‘‘While market activity doesn’t appear dramatic on the surface, there is plenty happening behind the scenes. Investors and firsthome buyers continue to transform the makeup of more affordable areas on the outskirts of our city centres.’’

He said population growth and affordability concerns were driving demand for semi-detached units and apartments in the main centres.

‘‘The continued slowdown in the rate of value growth in our main centres continues to have a ‘trickle-down’ effect on our regional centres, with many smaller provincial areas experiencing a gradual slowdown in growth. In saying this, regions that offer more affordable properties or exceptional lifestyle opportunities continue to see strong value growth.’’

CoreLogic head of research Nick Goodall said the fundamental drivers of the market still looked sound.

‘‘While some of the macroeconomic factors – GDP growth, net migration – which influence the property market are weakening, we can’t ignore the influence of credit availability,’’ he said.

‘‘With banks dropping mortgage interest rates and subsequently increasing their loan book, demand is holding up.’’

There were indications that lenders were starting to offer more money again, he said.

‘‘This appears to be relatively unique to New Zealand and we wouldn’t expect it to continue to increase exponentially, especially with more information coming to light across the ditch via the Australian banking royal commission. The industry will likely continue to control its standards and keep lending well below the loan-to-value speed limits, which could restrict the pool of people able to satisfy the banks’ criteria to get a mortgage, thus constraining future demand.’’