New Zealand house value growth slowed in May as expectations of capital gains weaken and activity dropped heading into winter, according to state-owned valuer Quotable Value.
National residential property values edged up 0.8 percent in the three months through May to $677,996, taking the annual increase to 6.9 percent, QV said. That's slower than the 1.1 percent gain in values for the April quarter, and the 7.6 percent increase year-on-year in April.
“As anticipated, nationwide sales volumes are down as we enter the usual winter slowdown although value levels are holding," said QV general manager, David Nagel. "This is typical of this time of year, as many people put off selling their property until the warmer months."
Still, Nagel said values remain relatively high, as low interest rates, the loosening of Reserve Bank restrictions on more highly-leveraged mortgage lending and government kick-start packages, such as the KiwiSaver HomeStart grant and savings withdrawal, continue to fuel demand.
Nagel said quarterly growth across the Auckland and Wellington regions "has come virtually to a standstill", and value growth across the regional centres of Hamilton, Tauranga and Christchurch was flat. Dunedin bucked the trend, with entry-level prices remaining comparatively low and well-located properties continuing to demand high prices, he said.
In the Auckland region, which has led gains in house prices over the past five years, prices rose 1 percent on an annual basis and advanced 0.1 percent on a quarterly basis to $1.05 million.
"With a lower expectation of capital gains, particularly in Auckland, we’re seeing people show less urgency when it comes to selling or buying property," Nagel said.
In the Wellington region, values rose 4.3 percent on an annual basis, but dropped 1.1 percent to $633,759 on a quarterly basis, while in Christchurch values were flat over the year, and advanced 0.1 percent over the quarter to an average $495,148.
Hamilton values rose 3.1 percent in the year and 1 percent in the quarter to an average $553,873, while in Tauranga values rose 2.6 percent annually and fell 0.9 percent in the quarter to an average $700,744. In Dunedin, values jumped 9.4 percent on an annual basis and lifted 4 percent over the past three months to an average $408,827.
QV's Nagel said the state valuer was still seeing growth in regional New Zealand where values levels were initially slower to take off, but even provincial towns were showing signs that the growth over the past few quarters will be difficult to maintain.
“First home buyer activity continues to grow across the country, having been on the up for the past few years," he said. "This is particularly evident in the wider Wellington region, where the Hutt Valley and Porirua City are seeing high numbers of buyers in this category.
“With interest rates due to remain stable coupled with increasing costs faced by investors, I would anticipate the current trends will remain mostly the same over the coming months and vendors will need to put extra focus on marketing their property effectively in a tighter market.”