28 Jul 2021

House price growth shows signs of slowing

11:19 am on 28 July 2021

The rate of house price growth is showing signs of slowing in some of the hottest property markets, with one region recording the first decline in property values in a year.

Houses around Lyttelton area in Christchurch

Average values increased by 6.6 percent in the three months to the end of June, QV data showed. Photo: RNZ / Nate McKinnon

State-owned property valuer QV's rolling three-month average to the end June showed price growth for the most expensive and cheapest houses in the country's main centres slowed by 2.2 percent and 1.4 percent respectively. That brought growth to 6.3 percent for the most expensive properties and 6.9 percent for the cheapest.

Overall, average values increased by 6.6 percent in the period compared with a 8.4 percent lift in three months to May, the data showed.

"This easing is likely the effect of government intervention and a tightening of credit availability with the return of LVRs and the increasing likelihood of interest rate rises in the near future, not to mention the seasonal downturn that normally accompanies these cooler months," QV general manager David Nagel said.

Prices were still generally increasing but not at the rates seen earlier this year as demand was high, but supply was low, he said.

"How much higher will likely depend on how much higher interest rates will go," he said.

The most expensive houses in Marlborough recorded the first fall in house values in 12 months, declining by 0.1 percent to $1.03 million.

"Though the drop in Marlborough is almost immaterial, it is statistically significant when you look back at almost 12 months of solid growth across all of the 16 major urban centres we monitor," Nagel said.

He said there could be similar small drops in the values next month of the most expensive properties in Napier and Queenstown, where average price growth had been largely static or slightly down in consecutive months.

"By spring, we should have a clearer picture of what the market is doing and whether or not this cooling effect on prices is here to stay."

Of the cheapest houses, those in Upper Hutt had the greatest rise in price growth over the quarter, up 12.7 percent, followed by Whangārei (11.6 percent) and Papakura (10.7 percent).

Franklin, central Wellington and Hastings recorded the fastest price growth among the most expensive properties, of and 10.9 percent, 10.6 percent and 9.8 percent respectively.

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