House prices expected to ease: report

Photo: Getty Images
Photo: Getty Images
The rate of house price growth appears to have peaked over the past three months with sales and price growth set to ease in the months ahead.

CoreLogic's quarterly property market update for the third quarter ended September shows growth in average property values has slowed to 4.8%, from 8.1% in April.

CoreLogic chief property economist Kelvin Davidson said sales activity and property value growth had been cooling for a few months, with stretched affordability likely to be one factor for the subdued demand, with a few would-be buyers holding back.

"It wouldn't be a surprise to see single digit gains in property values next year, perhaps around the 5% mark," Davidson said, noting some regions had seen a drop in average values over the past couple of months.

For example, Rotorua's values were down 2.4% on three months ago, while Waikato District dropped 1.9%.

Davidson said the recent increase in the Reserve Bank's official cash rate was the latest in a long list of headwinds designed to cool the property market.

"My hope is that borrowers don't get complacent about mortgage rate rises given a typical one or two-year fixed rate could be above 4 percent next year," he said.

"Certainly, the combination of higher mortgage rates, low gross rental yields and tighter regulation, such as 40 percent deposits and the phased removal of interest deductibility, is having a strong effect on mortgaged investors' appetite and activity."

Comments

Come on... We've read these articals for the last 4 years and nothing but increased values. Has the amount of houses increases dramatically? No!
Business as usual and prices to rise stagnation at best.
If a change happens it will happen hard and fast due to an over step by this Govt that tip everything over the edge which will be a disaster but that is more likely that than a draw back on property prices.
Labour shortages, material shortages, Inflation, ALK'ers bugging out of ALK all point to the majority of NZ outside of ALK rising and prices inside ALK falling. Outside of ALK NZ is going to boom.

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