Wellington home prices ease but stay ahead of the pack
Wellington house prices are showing the first sign of slowing, but are still growing slightly faster than those in other main centres, according to Quotable Value figures.
However, one bank economist says house prices have been flat for the past five months and are expected to stay that way for the next 18 months at least.
Figures from Quotable Value out today show that for the year to September the average sale price for Wellington properties jumped $62,683 to $447,243, a 16.3 per cent increase, in the past 12 months, more than in other urban centres.
The next-strongest growth was in Auckland, where the average was $512,964, up 13.3 per cent or $60,216 over the year.
The national sales average increased 13.2 per cent over the year, slightly less than the 13.3 per cent calculated in the year to August.
The average New Zealand house price was $404,089.
Though the housing market is showing signs of cooling, some bank economists expect the Reserve Bank to lift official interest rates twice more next year, because of other inflation concerns.
Westpac Bank chief economist Brendan O'Donovan said the Reserve Bank would lift rates twice to battle "rampant inflation".
But the rate rises would be delayed as the Reserve Bank paused to assess the impact of a weak housing market.
In contrast to recent years, the housing market is expected to be the economic "laggard", with cities faring worse than the smaller centres.
Falling migration, higher interest rates and stretched valuations were all taking a toll on the housing market, Westpac said.
House prices had been "basically flat" for five months and were expected to stay that way for the next 18 months at least.
The good news was that if house prices remained flat, rapidly rising incomes would start to close the yawning affordability gap that had opened up in recent years.
However, Westpac said that in the end the inflation pressures would be too strong for the Reserve Bank, with demand outstripping supply across the economy, boosted by a flood of cash from the dairy sector, an expected government spend-up in election year and a strong labour market.
Despite predictions of rate rises, Westpac is forecasting a "golden era" for the economy, because of dramatic rises in food export prices. Food prices are rising because of population and income growth overseas, with world dairy prices up 120 per cent in a year.
"As a nation, we are going to do well," Mr O'Donovan said, with the economy forecast to grow 3.1 per cent this year and 3.4 per cent, next year- stronger than earlier forecasts.
Recent international credit market turmoil was a speed wobble for the world economy, not engine failure.
But the strong economy, supercharged commodity prices and higher interest rates were likely to push the exchange rate back above US80c again, and it could go as high as US85c.
Wellington's growth was slightly down on the 16.5 per cent recorded for the previous month.
Local QV Valuations spokesman Max Meyers said the lag between market dynamics and price shift was a risky situation for buyers. Wellington had not displayed typical increased sales after winter, which was a sign buyers were tending to be careful. "Most areas of Wellington are showing signs of easing back with a slight drop in the average sale price," Mr Meyers said. One exception was the Hutt Valley, where sales volumes were falling but prices seemed to be static, he said.
Auckland price growth was steady, but Christchurch showed a slight downturn, with the average house price growing 13.1 per cent to $364,357, compared with 14.1 per cent previously.
In the smaller main centres prices still seem to have a bit of life, with Hamilton and Dunedin showing greater increases in the average sale price than last month.
QV national spokesperson Blue Hancock said the general picture showed the first real sign of a slowdown in price increases.
"Residential sales volumes have been easing for several months and that trend can only continue for so long before it starts to impact prices," he said.
The year to date had seen house prices increasing steadily, but the September figures broke that trend. "Although it's only a very minor slowdown, this is the first time since January 2007 that our statistics have shown the rate of growth in values to be slowing," Mr Hancock said.
Wellington house prices are showing the first sign of slowing, but are still growing slightly faster than those in other main centres, according to Quotable Value figures.
However, one bank economist says house prices have been flat for the past five months and are expected to stay that way for the next 18 months at least.
Figures from Quotable Value out today show that for the year to September the average sale price for Wellington properties jumped $62,683 to $447,243, a 16.3 per cent increase, in the past 12 months, more than in other urban centres.
The next-strongest growth was in Auckland, where the average was $512,964, up 13.3 per cent or $60,216 over the year.
The national sales average increased 13.2 per cent over the year, slightly less than the 13.3 per cent calculated in the year to August.
The average New Zealand house price was $404,089.
Though the housing market is showing signs of cooling, some bank economists expect the Reserve Bank to lift official interest rates twice more next year, because of other inflation concerns.
Westpac Bank chief economist Brendan O'Donovan said the Reserve Bank would lift rates twice to battle "rampant inflation".
But the rate rises would be delayed as the Reserve Bank paused to assess the impact of a weak housing market.
In contrast to recent years, the housing market is expected to be the economic "laggard", with cities faring worse than the smaller centres.
Falling migration, higher interest rates and stretched valuations were all taking a toll on the housing market, Westpac said.
House prices had been "basically flat" for five months and were expected to stay that way for the next 18 months at least.
The good news was that if house prices remained flat, rapidly rising incomes would start to close the yawning affordability gap that had opened up in recent years.
However, Westpac said that in the end the inflation pressures would be too strong for the Reserve Bank, with demand outstripping supply across the economy, boosted by a flood of cash from the dairy sector, an expected government spend-up in election year and a strong labour market.
Despite predictions of rate rises, Westpac is forecasting a "golden era" for the economy, because of dramatic rises in food export prices. Food prices are rising because of population and income growth overseas, with world dairy prices up 120 per cent in a year.
"As a nation, we are going to do well," Mr O'Donovan said, with the economy forecast to grow 3.1 per cent this year and 3.4 per cent, next year- stronger than earlier forecasts.
Recent international credit market turmoil was a speed wobble for the world economy, not engine failure.
But the strong economy, supercharged commodity prices and higher interest rates were likely to push the exchange rate back above US80c again, and it could go as high as US85c.
Wellington's growth was slightly down on the 16.5 per cent recorded for the previous month.
Local QV Valuations spokesman Max Meyers said the lag between market dynamics and price shift was a risky situation for buyers. Wellington had not displayed typical increased sales after winter, which was a sign buyers were tending to be careful. "Most areas of Wellington are showing signs of easing back with a slight drop in the average sale price," Mr Meyers said. One exception was the Hutt Valley, where sales volumes were falling but prices seemed to be static, he said.
Auckland price growth was steady, but Christchurch showed a slight downturn, with the average house price growing 13.1 per cent to $364,357, compared with 14.1 per cent previously.
In the smaller main centres prices still seem to have a bit of life, with Hamilton and Dunedin showing greater increases in the average sale price than last month.
QV national spokesperson Blue Hancock said the general picture showed the first real sign of a slowdown in price increases.
"Residential sales volumes have been easing for several months and that trend can only continue for so long before it starts to impact prices," he said.
The year to date had seen house prices increasing steadily, but the September figures broke that trend. "Although it's only a very minor slowdown, this is the first time since January 2007 that our statistics have shown the rate of growth in values to be slowing," Mr Hancock said.