House prices in Auckland fell by 0.1% y-o-y, Dunedin see over 18% rise: CoreLogic QV

According to the latest data released by CoreLogic QV, i.e. December 2019 House Price Index, property values in New Zealand rose by 0.9% over the month, with the annual rate of growth increasing to 4.0%.

That’s up from the 2.0% lull in June 2019, and the strongest annual growth figure since September 2017 (5.0%). In fact, the quarterly rate of growth for the last three months of 2019 was 2.7%, which was the largest quarterly increase since November 2016 (3.9%).

This was the point at which the Reserve Bank of NZ (RBNZ) made its final round of tightening of the loan to value ratio (LVR) restrictions, most significantly requiring residential property investors to have a 40% deposit for new loans.

Also, over the three months to December 2019, Dunedin was the best performing main city with an increase of 8.7% in property values, and Auckland the weakest with only 1.9% increase. Wellington is another market to have finished the year strongly, with 4.4% growth to close out the final quarter.

Surprisingly, according to CoreLogic QV, Dunedin’s average property value now exceeds that of Christchurch. “Although we must also recognise the significant change across Christchurch and the wider region following the widespread damage caused by the earthquakes from almost a decade ago,” says CoreLogic.

CoreLogic Head of Research, Nick Goodall said “The end of 2019 saw a couple of high profile releases (bank capital requirements and LVR rules) from the Reserve Bank and ultimately they took a conservative stance with each of them. The resurgence in property value growth in the second half of the year, in conjunction with a lift in investor activity and lending, was enough to see the RBNZ take a ‘wait and see’ approach to making any changes which could accelerate further growth (and reduce financial stability). With this most recent data now available it appears that was a wise decision.”

Meanwhile the lower value (average value under $400k) provincial centres continue to experience higher rates of growth than their more expensive equivalents, as affordability pressures start to impact the potential buyer pool, and where local economies and incomes cannot sustain the significant growth witnessed in the last 4-5 years. Goodall added “While we’ve seen a resurgence in property values in our larger centres, we are starting to see a slowdown in some provincial cities as recent rates of growth can’t be sustained with consistent demand.”

“Property investors appeared to end 2019 in a relatively buoyant mood and we expect them to kick into 2020 with the same energy. What could make things interesting is the General Election scheduled for later in the year. Typically this creates uncertainty for the property market, however with a more comprehensive Capital Gains Tax (CGT) ruled out from both major parties there could be less nervousness among property investors than we’ve seen in the past when a potential CGT lingered,” he concluded.

(All information and content in this section is courtesy www.corelogic.co.nz)

-TIN Bureau