Residential property values are expected to slow down in the coming months
The property market shows some momentum, despite uncertainty caused by tougher lending criteria, higher mortgage rates and the current Omicron outbreak, according to the latest figures from CoreLogic.
CoreLogic’s House Price Index showed that property values nationally grew 2.1% over January. This was a slight increase on December’s 1.9% growth rate.
Auckland saw the biggest jump in average values, growing 3.3% in January to $1.47 million. This was followed by Hamilton and Tauranga, which posted 2.8% and 2.4% growth rates, respectively. Hamilton’s average value was at $908,475, while Tauranga was at $1.16 million.
Despite the growth, CoreLogic said there is mounting evidence residential property values could slow down in the coming months, with some areas more vulnerable than others.
“The shift to red in Aotearoa’s COVID-management plan brings another layer of uncertainty to the market, but with the increased difficulty to secure finance being the lead topic and probably greatest influence over the future of the market right now, the impact of social restrictions is likely to be minimal,” said Nick Goodall, CoreLogic NZ head of research.
With property market activity levels seeming to have passed their peak, CoreLogic said this will typically lead to a clearer slowdown in values after a lag of a few months. A significant downturn is unlikely, however.
“Homeowners have had their mortgage resilience tested at higher interest rates and they are likely to adjust other areas of their spending before missing mortgage payments,” Goodall said. “Unless they lose their job or a significant proportion of their income, they are unlikely to want to sell their property.”
