Annual Otago house-price increases continue to mirror the national 9% gain during the past year, while the separate Central Otago Lakes region surged 20%.
The presence of investors around Otago and Central Otago’s housing sector continues to influence both markets.
Nationally, prices rose 9.4% to $490,000 compared with January last year, Otago rose 8.6% to $304,000 and Central Otago Lakes rose 20% to $630,000, data from the Real Estate Institute of New Zealand showed.
While many regions continued to book year-on-year price gains, Westpac acting chief economist Michael Gordon said that in seasonally adjusted terms, overall house-sale numbers fell 6.7% for January (14.7% down unadjusted), reflecting a renewed downturn in the market.
"The biggest declines were in some of last year’s hot spots: Auckland, Wellington and Queenstown," he said.
He said rising mortgage interest rates were the "dominant driver" of house prices and the higher borrowing costs would have a more sustained impact on house prices than the Reserve Bank’s lending restrictions. While median house prices across the Central Otago Lakes region were up 20%, or by $105,000 to $630,000, REINZ regional director Gail Hudson said the sales volume for the region was down 15% from January last year, down 13% in Queenstown and 17% in Central.
"The loan to value rules that came into effect in October are still having an effect on the market with fewer first-home buyers active, although investors seeking higher-end properties are more active," she said.
REINZ regional commentator on Otago Liz Nidd said first-home buyers were continuing to "underpin" the market. However, she noted investors from Auckland were also still active, showing more activity than any other investor group.
"The number of listings is also on the rise, helping to alleviate the tight inventory position across the region," she said.
ASB economist Kim Mundy said sales activity was "weak" across many regions but was "particularly soft" in Auckland.
"Soft demand, associated with the investor-focused loan to value ratio restrictions, is slowing sales and also weighing on house price growth," she said.
She expected price growth to be "muted" in 2017, but strong population growth and limited supply would continue to provide a floor. Two of the 12 regions hit record high median sale prices in January, with Hawke’s Bay up 16% to $366,000 and Nelson/Marlborough up 25% to $470,000.
