Southern residential real estate market slows

Residential property values ​​continue to defy slump forecasts, but the latest data from Quotable Value New Zealand shows plenty of signs that the market has started to ease in the first month of 2022.

National revaluation manager Tim Gibson said Dunedin’s residential property market started the year with “a whimper rather than a thump”.

Average home values ​​edged down 0.4% in January, helping to lower the city’s three-month moving average value growth from 5.3% last month to 2 .9% this month.

Only Dunedin North (0.3%) and Taieri (0.4%) saw modest gains in value during January, he said.

“The market slowed as higher interest rates and tougher lending terms started to bite.

“There has also been a noticeable increase in residential listings, which has reduced some pressure on prices.

“But it’s still too early to tell if this is part of a long-term trend. We’ll get a clearer picture in February and March, as they tend to be busier months.”

Queenstown home values ​​also fell 1.3% in January, following two months of modest growth in average home values.

QV property consultant Greg Simpson said banks have now tightened the assessment of income and expenses, with the Credit Agreements and Consumer Credit Act coming into force.

“Since it came into force, it has become increasingly difficult to obtain mortgages, forcing borrowers to consider the second tier option for non-bank loans.

“Overall, there has been a strong restriction applied to the housing market against the tightening of these credit conditions.”

It was a similar situation at Invercargill where home value growth slowed at the start of the new year to a rate of 4.2% over the past three months – down from 5.7% reported last month and well below the national average of 6.1%.

QV registered appraiser Andrew Ronald said there was generally strong demand across the city, but many buyers were having difficulty securing suitable financing.

“That, combined with rising interest rates and uncertainty surrounding Covid-19, is having a dampening effect on the market.

“Supply has also increased in recent months, creating less competition between buyers,” he said.

QV chief executive David Nagel said New Zealand had seen “spectacular” growth in value throughout 2021 – increases unlikely to be repeated for a generation.

He said the 16 major urban areas monitored by QV showed a reduction in the three-month value growth rate compared to December data.

“This gives a pretty strong signal that value levels are reaching all-time highs as more sellers list their homes and the number of buyers declines, particularly first-time homebuyers and early-stage investors. seeking bank credit.

Mr Nagel said all eyes would now be on the foreign response to the planned reopening of borders.

“If the floodgates were to open again to new migrants and Kiwis returning to levels last seen in 2019, then we could see some strength returning to the property market as housing demand increases.

“But more likely we will see a gradual decline in the rate of growth as interest rates rise and tax deductibility rules come into effect for investors.”

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Penny D. Jackson