Wellington house prices up by 25.5 pc

There were staggering house price rises nationwide by year’s end, with Christchurch having the biggest with its average price up by 40.2 per cent annually, new Quotable Value (QV) figures show.

House prices in the Wellington region rose by 25.5 per cent, with most of that growth in the first half of last year.

The QV statistics show that the largest capital gains were on the Kāpiti Coast at 31.1 per cent for the year, with Upper Hutt not far behind on 30.1 per cent.

Wellington City prices rose by 22.2 per cent, well below the national and regional average.

QV senior consultant Blake Ngarimu said the Wellington region had had an unprecedented level of growth but that there has been a drop off in open home activity in the final months of last year.

That was particularly at the lower end of the market, he said.

‘‘A clear indication that higher interest rates and tougher lending conditions are starting to have an impact on the market.’’

Nationwide, in the last three months of the year, prices rose 7.8 per cent. Wellington region prices rose by a rate less than half that – 3.2 per cent.

QV operations manager Paul McCorry said it was becoming clear the level of price increases would not continue indefinitely as there had been a decline in the quarterly rate of growth.

In November, three-quarters of the areas monitored recorded increases in the quarterly growth rates, but in December half showed a decline, he said.

‘‘They are all still seeing values go up, but at a much slower pace. Of the half that are still showing an increase in the rate of growth, five increased by less than 1 per cent.

‘‘The market has pumped the brakes, but it hasn’t ground to a halt completely. And, after over 100 days in lockdown it is no surprise to see Auckland catching the wave of a now internationally recognised trend – a post lockdown market boost.’’

McCorry said while mortgage rates were rising, they were still low by historical standards, and this had probably likely prevented the market being stuck in the mud.

‘‘But any more increases could start to make both banks and their borrowers feel nervous. More rigorous lending criteria that came into effect in December will have banks really scrutinising every application.’’

Market dynamics were also changing, with a flood of listings on to the market in recent months, which meant more choice for buyers, he said.

‘‘They won’t attend every open home, and you won’t get as many multioffer situations. The chatter about properties being handed in at auction is real, as is property sitting on the market beyond the initial tender period and often re-listed with an asking price.’’

In Wellington, Ngarimu said there was more housing stock on the market, especially new homes and townhouses being offered for sale off plans, ‘‘giving buyers more options’’.

McCorry expected prices to increase in the smaller single digits towards the middle of this year, but realistic pricing would prevail and agents would need to manage vendor expectations carefully.

While the latest figures from Realestate.co.nz and CoreLogic also showed prices were up in December, there was a consensus among experts that the tide had turned for the market.