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Slower house price increases and regional price volatility reflect an uncertain market at a turning point, a property researcher says.

CoreLogic’s latest House Price Index showed prices nationwide increased by 4.8 per cent over the quarter and by 1.4 per cent ina month in September, which left the national average price at $950,229.

But the 1.4 per cent growth rate was down on August’s rate of 1.6 per cent, and marked the fifth consecutive month of a slower rate of increase.

Hamilton prices decreased by 2.8 per cent in August, but they increased by 5.2 per cent in September. It now has an average price of $823,283.

In contrast, Auckland’s quarterly rate dropped to 4.9 per cent in September from 5.7 per cent in August, and its monthly rate fell from 2.1 per cent to 0.4 per cent. This left its average price at $1,346,964.

Dunedin had the smallest monthly and quarterly rate of increase at 0 per cent and 2.6 per cent respectively, which put its average value at $672,031 in September.

Tauranga had the highest quarterly rate at 7 per cent, which left it with an average price of $1,046, 390.

 

Hamilton's house prices increased by 5.2 per cent in September.

Wellington’s monthly and quarterly rates were down on August, while Christchurch’s quarterly rate was down, but its monthly rate was up. Their average prices were now $1,082,993 and $666,371 respectively.

This market volatility was also apparent in the regional centres.

Rotorua prices were up 1.9 per cent in September after a fall of 0.9 per cent in August. But the city’s average price of $656,350 was down by 2.4 per cent over the last quarter.

In Gisborne, the monthly rate dropped into negative territory (-0.7 per cent) for the second time in four months, which left its average price at $594,990, up by just 1.6 per cent over the quarter.

But the quarterly rate in Hastings was 8.3 per cent, which took its annual rate change to 41.4 per cent. That was its largest rate of price increase on record and left its average price at $843,516.

CoreLogic head of research Nick Goodall said inconsistent sales prices were being seen across markets and this was reflective of uncertainty.

There was reduced demand and less fervent competition, although “quality stock” was still fetching strong prices.

“This is what can happen at turning points. Buyers ease back, but vendors won’t budge, so sales activity tends to decline without too much immediate impact on prices.”

CoreLogic head of research Nick Goodall says demand has reduced and the market is easing.

Lockdown would have contributed to the slowdown and a degree of pent-up demand would drive a market bounce back as alert levels lifted, Goodall said.

But it would not lead to a boom as seen after last year’s lockdown, as demand had clearly reduced and the market had already been easing.

That was because of stretched affordability, tighter lending conditions and rising interest rates which would impact on the number of potential buyers, he said.

“Investors are facing a much more regulated market and owner occupiers are about to have loan-to-value restrictions further tightened which will impact first-home buyers the most.

“Simply put, although people might want to buy, fewer people will be able to borrow the amount of money required and this will further reduce market activity.”

Goodall said his outlook was for the rate of price increases to continue to slow through this year and into next year.

A key driver of this would be increasing interest rates, but local factors, such as investor appeal, affordability constraints, and the local economy, would play a part to different degrees across the country, he said.

READ MORE(external link)

Bell, M. (2021, October 1). Housing market momentum continues to wane. Stuff.co.nz. Retrieved from https://www.stuff.co.nz/life-style/homed/real-estate/126543165/housing-market-momentum-continues-to-wane

 

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