Skyrocketing price trajectory may fizz out

The top sale prices for Dunedin homes to November last year were in (clockwise from top left)...
The top sale prices for Dunedin homes to November last year were in (clockwise from top left) Tirohanga Rd, Outram-Mosgiel Rd, Patrick St, Duncan St and Balmacewen Rd, property research firm CoreLogic reports. PHOTOS: GREGOR RICHARDSON
Seven of the top 10 house sales in Dunedin in the past year topped $2 million. But the days of skyrocketing prices could be over.

CoreLogic released its Best of the Best 2021 property report yesterday and in it the research firm predicted a cooling of the market in the year ahead.

CoreLogic chief property economist Kelvin Davidson said the factors behind house price increases were changing and New Zealand could be nearing the peak of the market.

"I’m not saying the peak is absolutely now, but I think we might look back in time and say, ‘Yeah that was more or less the peak of this cycle’."

Rising mortgage rates and credit constraints were among factors slowing house-price growth.

But those factors were tempered by low unemployment.

Historically, falls in house prices in New Zealand were linked to recession and rising unemployment, which were not in most forecasts.

CoreLogic had done some work around what parts of the country might be vulnerable to house prices falling and the South Island looked safe, Mr Davidson said.

In Queenstown, from April to June this year, house prices had dropped, he said.

Prices fell in the area about 7% or 8%.

But the housing market price drop was short-lived. By June or July, people had recognised there were opportunities there and snapped up any properties they could and the area bounced back.

"People who bought in June or July, I suspect, are pretty happy," Mr Davidson said.

Dunedin was an area where the effects of a changing market could be felt more significantly.

"I suspect buyers in Dunedin might start seeing a bit more choice out there. That puts the power in their hands a little bit more," Mr Davidson said.

The CoreLogic report said from the middle of the year sales had started to slow.

Sales volumes were down and property value growth also cooled from the middle of 2021.

There had been a "renovation boom" as homeowners stayed put due to finance restrictions or a lack of choice.

Next year, pressure on lending rates would continue and further lending regulation could hit investors hard who could start to cash in and list properties, the report said.

"Sales volumes have already turned a corner and are likely to be much quieter in 2022, with the pace of annual value growth surely set to continue to ease from a figure of more than 25% for calendar 2021 to perhaps low single digits in 2022."

hamish.maclean@odt.co.nz

Comments

We'll see soon if people from ALK are buying up large on their vacations soon.

Holiday away.....

 

Advertisement

Our journalists are your neighbours

We are the South's eyes and ears in crucial council meetings, at court hearings, on the sidelines of sporting events and on the frontline of breaking news.

As our region faces uncharted waters in the wake of a global pandemic, Otago Daily Times continues to bring you local stories that matter.

We employ local journalists and photographers to tell your stories, as other outlets cut local coverage in favour of stories told out of Auckland, Wellington and Christchurch.

You can help us continue to bring you local news you can trust by becoming a supporter.

Become a Supporter