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Pace of growth slows as LVRs impact - QV

Less established investors are looking to the regions as the Reserve Bank’s latest set of LVR rules start to impact on the market, QV’s latest data suggests.

Tuesday, November 1st 2016, 12:30PM

by Miriam Bell

Wellington's market is bucking the LVR impact trend

Values around New Zealand, including in Auckland, continued to rise in October - but the rate of growth slowed, according to QV’s monthly House Price Index.

The average national residential value increased to $622,309 in October, from $619,660 in September.

This was growth of 3.3% over the past three months and of 12.7% year-on-year, which leaves the national average value 50.2% above the 2007 market peak.

Once adjusted for inflation, the average national value was up by 12.4% year-on-year, leaving it 27.4% higher than in 2007.

In October, the Auckland region’s average value rose to $1,045,207.

This was growth of 5.3% over past three months of 13.8% year on year, which leaves Auckland’s average value 91.3% above the 2007 market peak.

Once adjusted for inflation, Auckland’s average value increased by 13.6% year-on-year, leaving it 62.1% higher than in 2007.

However, in both cases, the rate of value growth slowed: Auckland’s growth was at the slowest pace since March 2015, while national growth was at the slowest pace since May.

QV national spokesperson Andrea Rush said the index was now showing a slight tick to the right.

This reflected an easing of 1.6% in the annual rate of growth over the past month as the latest round of LVR restrictions begin to take effect.

Sales volumes are down by around 12.0% on the same period last year and mortgage approval rates are also down, she said.

“Auckland, Tauranga and Hamilton home values are continuing to rise, just at a slightly slower pace than they were prior to the new LVR measures being introduced in late July.”

Conversely, Wellington’s housing market appears largely unaffected by the new LVR restrictions, particularly at the more affordable end of the market, Rush said.

“The Dunedin market also continues to see good levels of activity and demand, while investors are less active in the Christchurch market and home values there continue to show only moderate value growth.”

Rush said that less established investors appear to be having difficulty raising finance with the new 40% deposit requirement.

“Those investors shut out of more expensive markets appear to be turning their sights to more affordable markets in relatively close proximity to North Island main centres such as the Western Bay of Plenty, Whangarei, Rotorua and the Waikato District.

“All of these areas continue to see very strong value growth.”

However, she added that recent CoreLogic Buyer Classification Data showed 34% of investors with five or more properties do not need to raise a mortgage so are not affected by the new LVR rules.

QV’s Auckland general manager Jan O’Donoghue agreed the new LVR rules are impacting on the market.

Demand has eased back from previous highs at the low-end of the market now that there are not as many investors active in the Auckland market, she said.

“It appears that new investors and ‘Mum and Dad’ investors are the ones most affected as they are reliant on higher loan to equity ratios, and so tend to be more affected by the LVR changes than well-established investors.”

There are also reports of investors’ having more difficulty raising the extra finance through banks, she said.

“There are still properties selling but it is not as easy as it was prior to the new rules coming into play.”

« Investors over-optimistic on price growth - ANZUnrealistic price expectations prompt warning »

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Lender Flt 1yr 2yr 3yr
AIA 5.35 4.49 5.25 5.55
ANZ 5.54 5.15 5.85 6.15
ANZ Blueprint to Build 2.78 - - -
ANZ Special - 4.55 5.25 5.55
ASB Bank 5.35 4.49 5.25 5.55
Avanti Finance 5.45 - - -
Basecorp Finance 6.45 - - -
Bluestone 5.29 7.49 7.59 -
BNZ - Classic - 4.55 5.25 5.45
BNZ - Mortgage One 5.55 - - -
BNZ - Rapid Repay 5.55 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.55 5.35 5.94 5.99
BNZ - TotalMoney 5.55 - - -
CFML Loans ▲6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.70 5.20 -
Heartland Bank - Online 4.00 3.85 4.70 4.84
Heretaunga Building Society 5.95 4.80 5.50 -
HSBC Premier 5.49 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.25 ▲4.29 ▲5.09 ▲5.35
Kainga Ora 5.43 4.57 5.58 5.85
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 5.00 5.55 6.19 6.39
Kiwibank - Offset 5.00 - - -
Kiwibank Special 5.00 4.55 5.19 5.39
Liberty 4.84 - - -
Nelson Building Society 5.95 4.95 5.85 -
Pepper Essential 3.44 - - -
Resimac 4.59 5.60 6.16 6.29
Lender Flt 1yr 2yr 3yr
SBS Bank 5.29 4.69 5.35 5.49
SBS Bank Special - 4.19 4.85 4.99
Select Home Loans 4.09 4.29 4.86 5.09
The Co-operative Bank - First Home Special - ▲4.19 - -
The Co-operative Bank - Owner Occ 5.45 ▲4.29 5.19 5.45
The Co-operative Bank - Standard 5.45 ▲4.79 5.69 5.95
TSB Bank 5.59 ▼5.14 ▼5.79 6.15
TSB Special 4.79 ▼4.34 ▼4.99 5.35
Unity 5.65 4.80 5.50 -
Wairarapa Building Society 5.24 4.55 5.20 -
Westpac 5.54 5.09 5.79 6.09
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.54 - - -
Westpac Special - 4.49 5.19 5.49
Median 5.45 4.55 5.25 5.52

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