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New Zealand’s momentum slowing

New Zealand property prices have continued to increase nationally in November, but have slowed compared to October, according to the latest data from CoreLogic NZ.

Their most recent report indicates values rose 1.8 per cent over November, down slightly on October’s increase of 2.1 per cent.

“The November reading shows a return to the trend of gradually easing property value growth, which has been in play since April this year, but was disrupted by the bounce in values in October, ” CoreLogic NZ noted.

“In fact, the annual growth rate trimmed back to 28.4 per cent at the end of November, down from 28.8 per cent at the end of October.

“This is the first time the annual rate of appreciation has dropped since August 2020 when the market stalled following the first COVID-19 forced lockdown in April and May of 2020.”

Change in property valuesAverage Value
MonthQuarterAnnual
New Zealand1.8%5.4%28.4%$987,401
Auckland1.5%4.9%25.7%$1,402,845
Hamilton0.9%10.0%30.5%$861,119
Tauranga2.1%9.2%35.8%$1,114,481
Wellington1.0%4.7%33.5%$1,114,979
Christchurch3.7%10.0%35.5%$719,493
Dunedin1.9%3.6%21.8%$696,009
National and Main Centres (Source: CoreLogic)

CoreLogic NZ Head of Research Nick Goodall said the slowdown reflected the natural loss in momentum after an extended period of strong growth, which has led to a deterioration in affordability, further impacted by rising interest rates and tighter credit conditions.

“Looking ahead to 2022, this slowing momentum is likely to continue, especially with further tightening of credit,” Mr Goodall said.

“Fewer owner occupiers are able to secure high-LVR loans since 1 November, and from 1 December changes to the Credit Contract and Consumer Finance Act (CCCFA), which brings greater scrutiny of a potential borrowers’ expenses and ability to repay their loan, will further limit the amount of lending written by banks.

“Add in the continued upwards trajectory of mortgage interest rates and some banks already implementing debt-to-income limits and it’s clear that demand for residential property will be negatively impacted as we head into summer,” Mr Goodall noted.

Meanwhile, rising listings volumes are also set to act as a headwind for property value growth.

While on a nationwide basis there are still fewer properties available than at the same time in the last two years, the opposite is true in some regions.

The lift in advertised stock levels is most acute in both the wider Wellington region and the Manawatu-Whanganui region, where there are 30 per cent and 33 per cent respectively more properties for sale now than the same time in 2020.

Both the Hawke’s Bay (+22 per cent), and to a lesser degree Southland (+2 per cent), regions also have more properties on the market than this time last year.

Mr Goodall said this steep recent increase is not a reflection of an unusually high amount of properties being newly listed for sale, as the flow of new listings remains consistent with prior years, but is a result of fewer properties selling as buyers become less willing or able to pay the prices being asked by vendors.

“At this stage vendors aren’t adjusting their price expectations, which leads to somewhat of a standoff as properties take longer to sell. The likely outcome will be seen in either downwards price adjustments from vendors or more properties being withdrawn from the market without selling,” Mr Goodall said.

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