Residential property values are holding out against expectations of a market retreat, but signs of a slowdown in growth remain evident.
The average home increased in value by 6.1 percent for the three months ended January, latest QV figures showed. Photo: RNZ / Cole Eastham-Farrelly
Quotable Value's latest house price index showed the average home increased in value by 6.1 percent for the three months ended January, down from the 7.8 percent quarterly growth in December, pushing the national average to $1.06 million.
QV said it represented an "exceptionally high" annual increase of 26.8 percent, slightly down from 28.4 percent in December.
The strongest growth was in Christchurch, up 8.8 percent for the three months ended January to an average value of $794,000, down from 12.7 percent quarterly growth in December.
Auckland followed suit, recording a 7.9 percent three-monthly increase to $1.54m.
QV general manager David Nagel said 2021's increases were unlikely to be seen again for a generation, but with interest rates on the rise, tightening credit conditions and supply pressures easing, the property market was expected to return to a "more sustainable" level of growth.
"We've seen house listings surge in many locations where previously there was an acute lack of stock. And with the banks tightening their lending criteria in response to the new legislation, we've noticed a real falling off in auction and open home attendance," he said.
Nagel said values were not seeing the double digit quarterly growth that became common last year.
"The annual rate of value growth is still exceptionally high though, reflecting the very strong value increases we saw last year. So that means it will take some time for this measure to reduce to more normal levels of growth."
Nagel said even though the growth was expected to become more sustainable, the border reopening may affect that.
"If the floodgates were to open again to new migrants and returning Kiwis at the levels last seen in 2019, then we could see some strength return to the property market as demand for housing increases.
"But more likely we'll see a gradual decline in the rate of growth, as interest rates rise and tax deductibility rules take effect for investors, with only a few locations showing any significant reductions in value."