Property price growth likely to fall

Following an almost 30 percent jump in national average property values over 2021, property price growth is likely to reduce to single digits this year – and could drop close to zero, a property economist says.

It follows bank forecasts of property price falls, ASB forecasting in December “small falls in house prices over the second half of 2022”.  In November, a BNZ Markets Outlook commented on a “stalling in house price appreciation”, more probably, a “modest correction in prices”.

Releasing its Property Market & Economic Update on Wednesday, Property analyst company CoreLogic said national property values rose 5.9 percent from September to December 2021.  December saw the average property value top $1 million for the first time, representing a “staggering” increase of almost $218,000 from the end of 2020.

But property prices are likely to have peaked, CoreLogic says. In December, sales volumes, (the number of properties sold) were around 28 percent below December 2020, an indicator that price growth will also slow.

Rising interest rates are contributing to affordability pressures. Credit supply is tighter, as lenders place greater scrutiny on affordability to meet Credit Contracts and Consumer Finance Act (CCCFA) requirements.