The rate of house price growth appears to have peaked over the past three months with sales and price growth set to ease in the months ahead.
house prices Photo: 123RF
CoreLogic's quarterly property market update for the third quarter ended September shows growth in average property values has slowed to 4.8 percent, from 8.1 percent in April.
CoreLogic chief property economist Kelvin Davidson said sales activity and property value growth had been cooling for a few months, with stretched affordability likely to be one factor for the subdued demand, with a few would-be buyers holding back.
"It wouldn't be a surprise to see single digit gains in property values next year, perhaps around the 5 percent mark," Davidson said, noting some regions had seen a drop in average values over the past couple of months.
For example, Rotorua's values were down 2.4 percent on three months ago, while Waikato District dropped 1.9 percent.
Davidson said the recent increase in the Reserve Bank's official cash rate was the latest in a long list of headwinds designed to cool the property market.
"My hope is that borrowers don't get complacent about mortgage rate rises given a typical one or two-year fixed rate could be above 4 percent next year," he said.
"Certainly, the combination of higher mortgage rates, low gross rental yields and tighter regulation, such as 40 percent deposits and the phased removal of interest deductibility, is having a strong effect on mortgaged investors' appetite and activity."
