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House price easing 'inevitable'

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  • House price easing 'inevitable'

    House price easing 'inevitable'
    15 November 2005

    People enjoying an Indian summer of house-price growth in the regions should prepare for an inevitable slowdown, a property specialist has warned.

    Bob Hargreaves, property studies professor at Massey University, said regional centres were bound to see house prices slow, "it's just no one knows when".

    Figures issued by Quotable Value yesterday showed that house-price growth in October slowed for the first time since March, with main centres leading the easing.

    "What we are seeing now is areas like Auckland levelling out, partly because of a dropoff in the apartment market," Professor Hargreaves said.

    Some provincial areas – still playing catchup – were rising.

    The strongest growth, more than 25 per cent in the year to October, was seen in regions such as Whangarei, Hamilton, Gisborne and Rotorua.

    House-price growth in Auckland City fell to 4.9 per cent in the year to October, from 5.8 per cent in September. Wellington City price growth stayed level at 11.3 per cent. But in its eastern, northern and western suburbs, prices went from 9.6 per cent growth in September to 8.6 per cent in October.

    AdvertisementAdvertisementFalling house prices could put a squeeze on the rental market, where investors have done well from rising house prices rather than from yields.

    Massey research showed that yields – the amount made from rental income after expenses – had fallen to as little as 4 per cent in some areas.

    But offsetting that in some cities was 10 per cent capital appreciation.

    Massey's quarterly residential rental market review for September showed that median rents had remained static in most areas during the past year.

    The biggest gains were in Lower Hutt, where median rents rose by $57 a week to $227 in the year from July 2004 till July 2005.

    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx