Only one main centre saw increase in monthly growth rate
While nationwide house prices continue to increase, the latest data shows a gradual easing of property value growth that is expected to continue next year.
CoreLogic’s latest House Price Index showed that national property values increased by 1.8% in November, which was a slower rate than in October (2.1%).
The annual growth rate dropped to 28.4% at the end of the month, down from 28.8% at the end of October – 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.
In addition, most main centres saw a reduction in the monthly growth rate last month, with Dunedin the only city to see an increase, from 1.6% in October to 1.9% in November.
In Auckland, home values grew by a further 1.5% during the same month, although the annual growth rate did slow slightly to 25.7% (from 26.3% in October). In Tauranga, the average property value moved past $1.1 million after rising a further 2.1% over November, and the annual rate of growth plateaued at a record level of 35.8%, the same as at the end of October.
Meanwhile, value growth in Hamilton further slowed over the month (+0.9%); however, the quarterly growth rate strengthened to 10.0%. In Christchurch, the quarterly growth rate hit 10.0% at the end of November – a record high. Similarly, the annual growth rate (35.5%) in the city broke the previous month’s record.
In Dunedin, the annual value growth rate dipped away from October to November; however, the market continued to grow (+1.9% over November), with 24% more properties listed for sale in Dunedin than a year ago.
Finally, property value growth in Wellington City slowed on all measures. However, the values still increased by 1.0% over November, with 15% more properties on the market today than a year ago.
CoreLogic NZ head of research Nick Goodall said the slowdown reflects a natural loss in momentum after an extended period of solid growth in the market until it took a hit from rising interest rates and tighter credit conditions. He added that he expects the slowdown to continue in 2022, especially with further credit tightening.
“Fewer owner-occupiers are able to secure high-LVR loans since November 01, and from December 01, 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,” Goodall said.
“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.”
Property buyers’ behaviour and insight has also changed, with the latest joint survey run by the Chartered Accountants Australia and New Zealand (CA ANZ) and Tax Management New Zealand (TMNZ) indicating that 70% of respondents said their clients changed or voiced their intention to change their residential property investment behaviours due to ongoing adjustments to the extended bright-line test and proposed changes to deny interest deductions.
The survey also found that over 21% of the respondents said they feel “not at all confident” about advising clients on the proposed new build interest limitation rules, while over 65% felt the phase-out and denial of interest deductions would be somewhat or extremely difficult to comply with.