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QV blames LVR rules for slowing growth

Growth in property values slowed considerably in January, QV says, pointing the finger and loan-to-value restrictions and rising interest rates.

Monday, February 10th 2014, 12:00AM

by The Landlord

It has released its latest statistics, which show nationwide values have increased 9.6% over the past year and 2.2% over the past three months.

Values are now 12.8% above their previous market peak. Auckland’s prices are 9.6% above their previous peak.

QV research director Jonno Ingerson said the change of pace in growth was noticeable, including in Auckland.

“Property value growth has slowed down in the first month of the year. The January index shows that nationwide values increased 0.3% compared to December, while a month earlier the increase was 1.3%. So while values are still increasing the rate of this increase has slowed considerably."

He said he would usually wait for more data before claiming to see a trend, but in this case the timing seemed to align with the introduction of loan-to-value restrictions.

Since October, banks have only been able to lend 10% of their new loans to borrowers with a deposit of less than 20%.

"There was widespread expectation that the LVR speed limits would slow down value increases, at least temporarily. However we did not expect values in Auckland to slow as they appear to have, given the supply demand imbalance. We also expected the other parts of the country, particularly provincial and rural areas, to be hit harder by the LVR speed limits, but at this stage this does not appear to be the case."

He said the expectation of increasing interest rates could also be slowing buyers.

Auckland valuer Bruce Wiggins said more properties were being advertised by negotiation, rather than going to auction.

“We are also seeing increased numbers of auctions that are resulting in no bids or being passed in which will by its very nature will slow down the volume of sales as the time to negotiate a sale post auction is extended.”

There were also indications the rate of growth in Christchurch was slowing. In the last three months values in the central, north and southern areas of the city rose 2.9%; the city and Banks Peninsula rose 2.6%, values in the Port Hills were up just 1.2% and values in the eastern suburbs increased just 0.8%. But year on year values in the city were up between 12 and 14% on this time last year.

Christchurch valuer Daryl Taggart said there had been a noticeable flattening in Selwyn, which reported a significant price increase after the earthquakes. “We are still seeing high demand for properties and with rents remaining high, there is also interest from investors as there are good returns to be had in the market at the moment.”

Values in Hamilton are stable, up 1.4% over the past three months.

QV said there were signs of improvement in Wellington despite a quiet Christmas period. Wellington West reported an annual rise of 3.8% compared to Wellington North, Central and South which were up 2.9% and Wellington City which was up 2.7%.

Provincial New Zealand’s fortunes are still mixed. In the North Island, the Gisborne district was up 5.1% and New Plymouth was up 6.5% over the past year. 

In the South Island, annual growth in Queenstown was 5.6%. Central Otago recorded a 6.6% rise while Westland values rose 6.9% in the past year. Areas such as Southland, Invercargill and the Buller district reported declines in values over the past year.

« Record price for lifestyle blocksWestpac: Market past peak »

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Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 3.95 4.49
ANZ Special - 3.55 3.45 3.99
ASB Bank 5.20 4.05 3.95 4.39
ASB Bank Special - 3.55 3.45 3.89
BNZ - Classic - 3.55 3.45 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.35 3.35 3.35
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank 5.80 ▼4.14 ▲4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - ▼3.39 ▲3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - ▼3.55 3.39 3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.35 4.25 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.55 3.45 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.55 3.45 3.99
Median 5.34 4.04 4.09 4.39

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