Flat house prices here to stay: QV

New Zealand’s property market has flattened and is likely to stay that way for at least the rest of the year, valuation data provider Quotable Value (QV) says.

Nationwide, the QV house price index dropped 0.1 per cent in May. Dunedin was the only main centre with any material value growth, up 1.1 per cent.

The southern city’s 4 per cent growth in the quarter was four times the value growth of any of the other main centres.

Even Wellington, which has had a strong run of price rises, experienced a drop of 1.3 per cent in May, attributable to weakness in Wellington City and less demand for higher-priced houses.

Tauranga reported a 0.9 per cent price drop over the last three months. Auckland and Christchurch’s markets had no real change over the quarter.

CoreLogic head of research Nick Goodall said there was more growth in many small, regional markets but even that looked to be subsiding. ‘‘While first-home buyer activity has been strong in many of these centres recently, unaffordability may now be starting to bite here, too.’’

Whanganui was one regional city that had further growth in May. Its quarterly price growth hit 5 per cent, the strongest rate in a year.

‘‘Investors in particular remain an active presence, perhaps taking advantage of the lower average value of properties here [$249,000],’’ Goodall said.

He said Dunedin’s price surge was likely to slow as the downward pressure of reduced immigration, less availability of credit and a tighter investment market took its toll.

‘‘We’ve seen Wellington drop away as well as Christchurch and Auckland, which were already flat. The flattening is more consistent now.’’

Goodall said housing demand would be reduced by the Healthy Homes Guarantee scheme imposing more requirements on landlords, more focus on dampening speculation in the market and ring-fencing of investors’ losses. ‘‘All these things keep a lid on demand.’’

He said, for owner-occupiers, it could be a good opportunity to purchase a property. ‘‘If you can afford it . . . there’s potentially less competition.’’

Goodall said the Reserve Bank was wary of a resurgence in house prices given New Zealand’s high household debt levels.

‘‘Their decision to leave loanto-value restrictions unchanged for now illustrates their caution of the market and the reliance on banks maintaining prudent mortgage lending standards.’’