16 Jan 2019

House price growth stronger in small towns

6:15 am on 16 January 2019

House values have increased steadily over the past year, despite little change over the peak holiday season.

House sold sign, house auction sign, key.

Photo: RNZ / 123rf

Quotable Value's monthly House Price Index increased 3.2 percent for the year to December, and by 1.2 percent over the quarter.

The national average house price rose slightly by $1393 to $682,938, over November.

QV general manager David Nagel said the modest increase was in line with expectations.

"The busy Christmas period can mean that people put off buying or selling until the quieter New Year period.

"As a result, we often don't see any dramatic changes in market activity or value growth - which appears to have been the case early this year."

Mr Nagel said growth in small towns had continued to outpace the larger centres.

"Another point of interest is the continued growth on many smaller regional towns, particularly in the central and upper North Island. Kawerau, Carterton, South Waikato and Ruapehu in particular continue to see strong quarterly growth figures on top of solid annual growth."

The growth in provincial centre prices was led by Kawerau, Carterton and South Waikato in the North Island over the past quarter, and Southland, Invercargill and Gore regions in the South Island.

He said the Auckland market was slow, with a year-on-year drop of 0.4 percent, and a 0.1 percent rise over the past quarter.

That was in contrast to the Wellington region, which rose 7.8 percent over the year, and 3.2 percent over the past quarter to an average value of $688,074.

Mr Nagel said values were likely to rise in the first part of the year with an easing in bank lending restrictions, which took effect from the beginning of the year.

"I don't anticipate this impact to be overly significant, but it may help drive a busy property market in the early stages of 2019."

He said there was also likely to be movement in the rental market, with increasing competition for properties, particularly in the Wellington region.

"According to the Trade Me Rental Price Index, the cost of rent in Wellington is now very similar to Auckland which really does say something," he said.

"With the Healthy Homes Bill due take to effect later this year, I'll be closely monitoring the impact this will have on the supply and costs of rental accommodation."

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