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ODT senior business reporter Simon Hartley asks if cracks are appearing in the southern housing market. Quotable Value spokeswoman AndreaRush believes there is no regional downturn.
House values across Otago have grown by at least 30% to 40% in most townships and suburbs since the start of the 2007-08 global financial crisis, but gains during the latest quarter to December are reflecting more sobering data.
Of 27 towns and suburbs, including Dunedin, Queenstown and Oamaru, just three went backwards in quarterly gains — Frankton, Alexandra and Cromwell — but of the balance most had gains in a range of just 2% to 3%, according to Quotable Value’s latest data.
Auckland and Queenstown vied for top values during the past 18 months, but their high costs pushed buyers further into the regions, in the North Island and parts of the South Island, which began to benefit from the increased interest.
That beneficial time appears to be on the wane, as consecutive quarterly gains diminish to 3% or less, as cracks appear with negative gains in a few places.
Quotable Value spokeswoman Andrea Rush said the easing of the Reserve Bank’s loan to value ratio (LVR) restrictions would further promote activity in the market, boosting some areas which were previously excluded during the period because of tighter lending criteria.
‘‘The previous restrictions did not appear to dampen the market in the long term for owner occupiers; the effects were more evident within the investment market,’’ Ms Rush said.
During 2017, many regions benefited from cashed-up buyers looking beyond pricey Auckland for new homes, or investment properties, as far south as Dunedin and Queenstown.
Ms Rush said there were no signs of a regional downturn at this stage, although the rate of value growth did slow in the final quarter of 2017, mainly due to uncertainty caused by the general election and new government policy announcements.
Ms Rush said regional centres, including Dunedin, continued to experience value growth.
‘‘In the final quarter of 2017 this did slow a little but demand has remained strong across the market for well-presented properties,’’ she said.
QV Dunedin property consultant Aidan Young said the city’s market had picked up since the December break, and multiple offer situations were becoming commonplace.
‘‘Competition in the lower end of the market below $400,000 is very competitive,’’ he said.
The mid to upper end was also having ‘‘solid’’ transaction volumes and levels of interest, which further confirmed confidence within the Dunedin housing market, he said.
‘‘Open homes are being well attended and the demand for vacant sections is strong.’’
Dunedin has had a ‘‘steady increase’’ of value levels during the past 12 months, he said.
Quarterly, Dunedin values all had changes, albeit only slight.
Mr Young said the outlook for Dunedin in 2018 was ‘‘positive’’, providing economic conditions remained consistent with those of recent months.
‘‘The low cost of borrowing will further fuel the Dunedin market with strong competition from the trading banks with annual interest rates and incentives,’’ Mr Young said.
Ms Rush said she expected values in the Queenstown Lakes district to hold for another year, noting that market was driven by limited supply and excess demand.
‘‘The Queenstown market continues to counter trends seen in Auckland and Christchurch and reflects the strong growth in regional centres being seen in many parts of the country, with average residential property value levels increasing,’’ she said.
Queenstown Lakes activity, which had been pent up during the election period, was now released and Ms Rush had observed that in the first quarter as a ‘‘bounce back’’ from the 0% quarterly growth during the election period.
On Central Otago, Ms Rush said that in the final quarter of 2017 there had been ‘‘steadying market conditions’’ with limited sales volume and supply of properties, but that market had since picked up during the first quarter of 2018.
‘‘We expect to see the market hold steady for another year.’’
She noted the government books would be opened in February 2019 with the last of the predicted budget surpluses to come to an end.
‘‘We can expect that this may have an effect on the market in 2019,’’ Ms Rush said.
For the year ahead, she said it appeared to be easier for buyers to gain finance than for much of 2017.
‘‘In the interest rate market there are new 12-month rates.’’
‘‘Specials’’ now seemed to be the norm from all banks.
‘‘We’re also seeing cash back creeping back into the market from lenders, predominantly aimed at under 80% loan to value and owner occupied.’’