New Zealand housing values have grown at their slowest rate since 2012, especially in the heated Auckland market where a negative growth rate has been recorded. The country is unlikely to suffer the same steep drops as Australia, however, with the average nationwide value still managing to hit a fresh high in December 2018 of $682,938. In fact, a busy start to 2019 has been predicted by some experts, thanks in part to more relaxed loan-to-value ratio (LVR) lending rules and competitive economic conditions.
According to the latest Quotable Value (QV) data from December 2018, residential property values increased 3.2 percent over the year to December, including growth of 1.2 percent over the last quarter. While this annual growth rate is the slowest since the 3.1 percent recorded in April 2012, and values in Auckland are down at -0.4 percent over the year, optimism is still the dominant paradigm. The average property value for the Auckland region is still above $1M at $1,048,145, with LVR changes only likely to increase demand.
The LVR changes are already in effect, having started on January 1, 2019. Designed to help first-home buyers and those doing it tough, banks will now be able to offer up to 20 percent of their loans to owner-occupiers with a deposit of less than 20 percent, and up to 5 percent of their loans to borrowers with a deposit of less than 30 percent. These numbers have been increased and lowered from 15 percent and 35 percent respectively.
According to QV general manager David Nagel, these changes alone will create a busy start to 2019: "The loosening of the LVR restrictions should enable some new first home buyers and investors to enter the market in the coming months. I don’t anticipate this impact to be overly significant, but it may help drive a busy property market in the early stages of 2019." Auckland may be able to claw its way back into positive territory over time, with well-located and presented properties still selling well and demand from investors still healthy.
Along with making it easier for some people to enter the market, the LVR changes are also likely to affect renters: "I am particularly interested in the rental market where we’re seeing a lot of competition particularly in the Wellington market. According to the Trade Me Rental Price Index, the cost of rent in Wellington is now very similar to Auckland which really does say something. With the Healthy Homes Bill due take to effect later this year, I’ll be closely monitoring the impact this will have on the supply and costs of rental accommodation," said Nagel.
Away from Auckland, values in Wellington rose 7.8 percent over the year and 3.2 percent over the quarter. LVR changes will also have a positive effect on the nation's capital, as will low interest rates and ongoing supply issues in many parts of the city. The average value in Wellington was $688,074 in December. In Christchurch, values increased 0.5 percent over the quarter to $496,562. In Dunedin, values increased sharply by 11.2 percent over the year, including a jump of 3.5 in the December quarter to $434,903.
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