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Quotable Value says housing market likely to cool further as higher interest rates kick in

Quotable Value says housing market likely to cool further as higher interest rates kick in
Photo: Kenneth Allen https://www.geograph.ie/profile/2282

Quotable Value (QV) says the housing market is "clearly cooling," even though the national average dwelling value hit a record high of $952,078 in June.

That was up by 4.3% compared to three months earlier and up by 26.4% compared to July last year.

The cooling effect can be seen in the amount average dwelling values are increasing.

July's national average value of $952,078 was up $8895 compared to June's national average value of $943,184.

But June's average value was up $11,256 compared to May. And May's average value was up $18,719 compared to April.

So over that three month period, the amount by which the country's average dwelling value increased each month has declined from $18,719 to $8895.

On a percentage basis, the three monthly growth rate has declined from 8.8% in May to 4.3% in July.

"The market is clearly cooling now as a result of government and Reserve Bank policy initiatives aimed at dampening the enthusiasm of investors," QV General Manager David Nagel says.

"With looming interest rate rises, we'll likely see a continuation of this trend."

All of the 16 major urban centres tracked by QV's House Price Index showed a reduction in the rate of growth in July compared to June, but only two, Rotorua and Marlborough have so far showed actual declines in average values.

In Rotorua the average value declined form $691,789 in June to $684,130 in July (-1.1%), while the average value in Marlborough declined from $689,485 in June to $686,403 in July (-0.4%).


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"The fundamentals of the property market are still strong, so we're unlikely to see a wholesale reduction of values anytime soon, but we may begin to see quarterly value growth taper off in some localities altogether, and even some small reductions as we come to the end of the current growth cycle," Nagel said.

According to the QV HPI, the districts with the highest and lowest average dwelling values are both in the deep south, with the average value sitting on $449,548 in Invercargill, while just up the road in Queenstown it's more than three times as much at $1,435,138.

See the chart below for the average values and three monthly rates of growth in all 16 districts tracked by the QV HPI.

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58 Comments

Is it April 1st in New Zealand?

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The housing market calender is stuck on April 1st, one sick joke...

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Property booms don't go on forever........

Prepare for a soft landing.

TTP

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We haven’t even reached cruising altitude yet. Sit back, relax and enjoy the champagne (for those in business class).

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Spring is nearly here...

Headline is written by a QV FHB dreaming of Christmas in August.

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Is QV a DGM?

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Not in NZ. It will keep on going up and up and up.
Our government will not let prices fall down. Just keep buying old houses from each other at inflated prices. Let's keep it going up and up.

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Clients paid $295,000.00 for a site at Xmas 2020. Other sites in same sub-division now selling at $405,000.00. Really good to see the market cooling!

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Lies. Quotable Value are doom and gloom merchants.

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So virtually every factor that led to a boom has either been reversed, or will be reversed, and they expect growth to taper, and maybe some small drops?

Seems hopeful.

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Let’s hope there is a much needed down turn. My worry is that the government/rbnz will remove all handbrakes to protect the market if it looks wobbly.

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"...... government/rbnz will remove all handbrakes ......."

Rockets don't have handbrakes.

TTP (-;

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And neither do falling rocks.

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Yeah you can't use rational demand / supply analysis on the market as when things slow down the RBNZ or government comes along to kick things off again.

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Quotable Value (QV) says the housing market is "clearly cooling," even though the national average dwelling value hit a record high of $952,078 in June.

That was up by 4.3% compared to three months earlier and up by 26.4% compared to July last year

HEADLINE COULD ALSO BE THAT HOUSE PRICES STILL RISING TO NEW HEIGHT FROM ALL TIME HIGH.

ALSO comparison does not throw correct picture as last year after just after panadenic house prices had increased by 20% to 30% so this year even if the price rise by 10% or 20% can be termed that growth has reduced but reality is otherwise (add from where they started last year april are up 50% to 120% in some places / houses, as a friend bought house in maurewa last year May for $620000sold recently for %1.32 million as had section but still....)

This headline is judt to manipulate and spin the reality that house prices are still rising and touching new height even today on a eeekly basis.

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Correct. Bought a house in February last year for $860000 and last year, just after few months a real estate agent approached with an appraisal of 1.2 million and recently when I met was advised that can get me 1.35 million plus.

So rise of 40% last year and if compare it with already high price last year to now is a rise of just 12% to 15% and if next year is 1.45 million can again give headline that growth slowed to 8% to 12% but will not be a true picture, reality will be that my investment will literally doubled up in two year - type of money that I would have seen at retirement after 15 or 20 years possible in 2 years - thanks to Jacinda Arden as will shut down the cafe that I slog.

Yes this comparison does not reflect true picture.

So can highlight that price growth slowed but headline as you mentioned should be that house price still rising and touching new high.

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Greg, will you like to change the headline and also that if any LVR - that is BIG IF Mr Orr actually changes/raises LVR for investors or raises OCR will have effect on hiusing prices and highlight that just because it is comming from some person in high post is not correct, remember even Mr Orr was forced to admit that most time they are wrong.

Also if this David Nigel is expecting similar effect if LVR changes or OCR goes up as policy announced in March than GID SAVE FHB, if still alive.

'The market is clearly cooling now as a result of government and Reserve Bank policy initiatives aimed at dampening the enthusiasm of investors," QV General Manager David Nagel says.

"With looming interest rate rises, we'll likely see a continuation of this trend."

Readers comment welcome as experts wil not comment but if they do, will like to hear their exert comment on Why QV headline does to reflect trye picture and is using tecnical to create a smoke.

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Yes… bought a turnkey last year and settlement valuation was 22% above PP… probably a whole lot more now. Property in HB purchased in 2017 had just doubled in June according to QV. After an estate agent appraisal this week it’s gained another 10%. Must be manic down there.

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https://www.nzherald.co.nz/business/house-value-growth-slows-23-market-…

Mentions that house price rise by JUST 4.3% in last 3 months and this is comming after officially 30% rise.

Definition of house price cooling has been changed and the media instead of raising question, fall for it but thanks for all BS, will be able retire as this pandemic has been a boon to us and Jacinda and rbnz messiah.

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Yes its not a true picture because the large gains are compounding. Its percentages on top of percentages. Suddenly your house has doubled in only a few years when it used to take 7 to 10 years plus. Even 4.3% over 12 MONTHS would still be to high now, gains of half that could be barely considered normal.

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This is a key point and this is what it looks like when the exponential multiplier starts to take effect.

I think serviceability at these interest rates is just about manageable but this will change in a very unpleasant way if interest rates go up.

A mortgage on $1m at 3.15% on a 30 year mortgage is $4,297/mth, move it a little bit up to 4.55% and it is $5,097/mth and there goes the car payment or the lounge payment or even just the annual holiday. It is this effect that will not just cause house prices to stall but drive a recession.

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So, they've seen one month of data and implied a trend? Gimme a break guys. The economics profession is taking it in the neck already.

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At the coalface here and I tend to agree. Wait for an actual OCR hike instead of planned and that will be all folks. Kiwis will knuckle down and pay their mortgages and restaurants will go broke.

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I agree, the discretionary spending will take a huge dive. Paying your mortgage is at the very top of the priority list, if you have to live on baked beans and the kids don't get any Christmas presents then that's the way it will be.

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Sounds like a recipe for a recession. Particularly as many are living that way already.

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This is exactly it. All very well to say I'll just knuckle down and eat baked beans on toast, but each Christmas present your kid doesn't get is a lost sale for someone else, and that someone may very well have a mortgage of their own.

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Recession.....House have been earning appox $4000 to $6000 per week since last 18 months - much more than joined family income.

So now earning $3000 per week is cooling .....This confirms the mindset of of not only Jacinda's and Orr's of NZ but of most owning a house and everyone in power to influence and make policy be it economist, experts, media, politicians.....are all deep into investing in housing......SO this housing crisis will never be addressed.

FHB admit it and move on....the other best option of not owning owning a house is to go on dole and social housing as middle class aspiration have been killed so might just chill than working hard....WORK HARD FOR WHAT WHEN YOU WILL ALWAYS BE STRUGGLING.

Negative comment but that is what Jacinda wants, so be it.

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I agree if you’re a non-Maori middle class male without much family wealth you will get nothing from working hard in NZ.

If there isn’t a change of government I’d be leaving for 5 or more years with a financial plan to come back with a few hundred thousand and an Eastern European beauty.

Hopefully by that time the landscape will be far better than what we have now.

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Dammit, how did you find out about the special secret government benefits every middle class woman gets just for being a girl? Thats classified information.

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The women don't get it. Neither do the trans women. Is there a new category of women you are referring to? Even disabled women are cut off from even receiving any disability support. Hence NZs worsening abuse and family violence rates. As women are not seen as being human by government departments until they are attached to a male partner. They also are considered a chattel of their partners by the NZ govt even when applying for any income support (which often gets denied before application). The NZ govt being kind.

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If there isn’t a change of government I’d be leaving for 5 or more years with a financial plan to come back with a few hundred thousand and an Eastern European beauty.

Are you still betting on Europe being the land of milk and honey for young Kiwi males rocking up with a working holiday visa? Better have a stronger plan than that. The mail order brides aren't cheap either.

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If we have to remortgage later this year at 1% higher we will be paying $60 more per week and we will definitely reduce discretionary spend.

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One less bottle of champers each week?

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That is one small mortgage you have there, well done. Unfortunately FHB's are going to be much more impacted due to the size of their mortgage.

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Most first home buyers should see about $125 - $190 per week of extra costs per 1% of mortgage rate increase.

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Indeed, with our CPI at 3.3% for the June year and the US sitting at +5.4 for the same period we will be lucky to get away with a raise to 1.25 (1 percent), imagine if we went to 2.25... FHB facing ~$400 a week increase, an increase on the current ~$1000... May the economy rest in peace.

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This is what Mr Orr will say when he keeps the OCR as it us.

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Don't want to say fake news.

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I thought Mike Kirk called this as happening in Feb this year already?

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It's like 100 degrees boiling water cooling to 99 degrees. Yes, technically it's "cooling".

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Sooooo many comments here from people who have already (in their head) banked their gains.
Let's guess...they have never lived through a down turn?

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It reflects the confidence that they have on Aunty Jacinda and Uncle Orr and why not as their action speaks louder than words or shall we say their inaction....

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Don't forget Ardern saying (and paraphrasing) we all expect house prices to rise over time.

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By over time he meant over week..

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If it crashes. She will say "of course, yes it will always go up, over the long term, kiwis know about averages and long term investment" etc etc.

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I've banked it in my bank account already + banking on more gains.

A down turn? Hardly the case when prices are going up 50k a month where I am invested in.

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nah I don't believe what I am seeing ! .....the world's most "fair & balanced" housing market cooling down ....must be a misprint ! ...interest rate increases won't matter, as the banks will create 50 yr or intergenerational mortgages ....ya just can't lose .....get out there and pick up those bargains now folks ....otherwise your at least looking at a 10% increase if you wait another 12 months ...why pay $1.1 mil next August when you can pay $1 mil today ! ....happy daze :)

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That can't be true. The Circle Jerk Squad (CJS) said that spring is coming, be quick.

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One more sleep until the big day. Very exciting stuff but only really exciting if your no longer having to sit in the Circus tent watching the clown show otherwise its excruciating.

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Haha exactly what I said would happen. Winter comes along, standard winter slow down and boom, we did it we slowed the market. Haha idiots

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People nowadays are getting more strange.

Getting hot, not happy. Cooling down, not happy. Got turnkey, complain it's too small. Got a lifestyle, too secluded. Got a pre-approval from ASB, they gave too much. Got a pre-approval from ANZ, they gave too little.

Maybe a few more rolling blackouts will sharpen people up.

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It's different groups of people for each category

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Come along way from 1998 eh.

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Labor should change their party slogan to ‘Let’s Screw This’

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Tomorrow we shall see a new bird spread its wings. The dovawk. Incremental shift upward in rates prefaced with hints of impending rises to come. Nothing too spooky and a 50/50 side bet that moves upward will very likely be shortlived.

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Guess they would have to...40.7% last 12 months in Horowhenua.

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It's all driven by fear and greed imo. We have sold out our young people who will head offshore.

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