Tax changes yet to dampen red-hot New Zealand housing market

PHOTO: Auckland, New Zealand. FILE

Just over a month has passed since the Government announced measures aimed at dampening the rampant growth of the property market, and yet the latest QV House Price Index data shows the market hit a new high in April.

The average value increased 8.9% nationally over the past three-month period, up from the 7.8% quarterly growth we saw in March, with the national average value now sitting at $913,209. This represents an increase of 21.4% year on year, up from 18.2% last month.

The average value in the Auckland region now sits at $1,306,913, up 8.2% over the last quarter, with annual growth of 19%, up from March’s year-on-year growth of 16.1%.

Of the 16 major urban centres we monitor, all except Napier City and Queenstown Lakes District are showing an increase in quarterly growth compared to last month. However, Napier is still showing the strongest gains in value, followed closely by Hastings, with 14.2% and 14% value growth respectively over the past three months.

QV general manager David Nagel said: “We’re hearing a range of anecdotal evidence of investors disappearing from auction rooms and even a decrease in first-home buyer presence. And while less properties may be selling under the hammer, the majority are still being sold at prices that are at least as strong as before the tax announcements were made at the end of March.”

“We’re starting to see some interesting regional trends emerging, with the strongest value growth occurring in the southernmost regions of the North Island. The Hawke’s Bay region, Manawatu-Wanganui and also the greater Wellington region are all showing very strong month-on-month value growth with Hawke’s Bay leading the pack at 4.9% monthly growth. The two southern regions of Otago and Southland are showing much more conservative monthly growth of just 2.1% and 2.5% respectively,” he said.

“We’ll all just be guessing the impacts of the recent tax changes until we get another couple of months of sales data to analyse. But there’s certainly an expectation that we’ll see at least a slowdown in the rate of value growth, with potentially less investors and maybe a few more first-home buyers entering the market over the coming months,” Mr Nagel added.