The Real Estate Institute of New Zealand (REINZ) has released its November house price results, which registered an increase in median values nationally, with price increases also recorded across the major markets.
In the month of November, the national stratified median price rose by 1.2% to just over $437,000. Prices rose by 2.9% in Auckland over the month, whereas prices in Christchurch and Wellington increased by 3.4% and 4.4% respectively (see next chart).
The price changes are shown more clearly in the below chart, which shows the values in index form since 2005:
On an annual basis, house prices rose by 9.6% nationally in the year to November 2013 to be 14.9% above their November 2007 peak. Prices in New Zealand’s largest city, Auckland, rose by 14.9% in the year to November 2013 to be 30.2% above their July 2007 peak. This was followed by New Zealand’s second biggest city, Christchurch, where prices rose by 12.2% over the year to be 17.9% above their 2007 peak. Finally, prices in the capital, Wellington, rose by only 6.2% in the year to November, but were only 5.3% above the September 2007 peak.
While it may not seem apparent by the above house price results, new speed limits on high loan-to-value ratio (LVR) mortgage lending, implemented by the Reserve Bank of New Zealand (RBNZ) on 1 October 2013, appear to be biting, which should act to curb house price growth into 2014.
According to Interest.co.nz, sales fell by 6.6% compared with November 2012, suggesting that RBNZ’s new lending limits are having an impact.
Any slowdown in the housing market arising from the RBNZ high LVR lending speed limits could be expected to hit sales volumes first before prices.
In a similar vein, the latest home loan approvals data from the RBNZ, released yesterday, revealed an ongoing weakening of mortgage demand, with year-on-year growth in the number of approvals falling by 9.4%: the lowest rate of growth since February 2011 (see next chart). This also suggests that price growth should slow considerably in the months ahead.
