Want an ‘average’ New Zealand home? You will need $ 1 million
The past 12 months have been a banner year for the New Zealand housing market, new data from Corelogic confirms.
The real estate data company’s December home price index shows prices nationwide rose 27.6% from 2021, a faster rate than the previous record high of 24.4%, reached in 2003.
Prices rose 1.9% in December alone.
The average New Zealand home value surpassed $ 1 million for the first time in the Corelogic Index in December, to $ 1.006 million.
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Auckland prices rose 24.9% in 2021, Wellington prices 30.6% and Christchurch prices 38%.
Among the smaller centers, Rotorua’s prices grew the fastest at 18.2 percent during the year. Whangarei and Whanganui both saw price growth of over 9% in the last quarter of 2021.
CoreLogic NZ chief research officer Nick Goodall said the year had been “remarkable” and well beyond what had been expected. But he said, in retrospect, that the strong price growth made sense given the low interest rates and the ease and availability of credit for most borrowers throughout the year.
But he said those two factors were changing, not least because of changes to the law on credit contracts and consumer finance, which are forcing lenders to consider borrower requests more carefully. Mortgage brokers described it causing a “credit crunch” and said the changes had gone too far.
“While the changes clearly did not have an immediate impact on all borrowers, with values ââstill rising at above-average rates, they are expected to be felt more widely throughout 2022 as the rise lower interest rates and reduced affordability combine to reduce borrowing capacity, “he said.
Growth particularly slowed in Wellington and Tauranga at the end of the year. In Tauranga, annual growth was 35.8 percent in November, but it slowed to 30 percent in December, and in Wellington, it fell from 33.5 percent to 30.6 percent.
Queenstown prices fell 1.2 percent in December, to $ 1.6 million on average.
Goodall said that even as growth slowed, there was still potential for an increase in some areas, such as Christchurch, where the average value of $ 744,661 was significantly lower than Wellington’s at $ 1.125 million, and d ‘Auckland at $ 1.426 million.
He said there had been an increase in listings available, which meant buyers had more choices and could lead to less price pressure. âSuppliers don’t have everything in their own way like they have over the past couple of years. “
He said the balance had not changed so much that sellers would immediately accept lower prices and there would be a “dead end” between buyers and sellers before sellers adjusted their expectations.
“Unless the seller is an investor looking to divest his portfolio due to reduced profitability, his willingness to accept less than his perceived value will also be low – at least for the start of 2022.”
He said house prices were unlikely to fall, even if interest rates rose significantly.
âHigh inflation leads to forecasts of a continued upward movement in the official spot rate (OCR). Westpac’s economics team, for example, predicts OCR will reach 2% by September 2022. But with responsible lending practices securing both equity (through loan-to-value restrictions) and The mortgage department (thanks to valuation interest rates) can handle the changing market, along with a strong labor market, the likelihood of forced sales or even motivated sellers remains low.