House prices: Rising interest rates start to bite

Rotorua’s residential property values dropped by an average of 1.5 per cent this quarter.

The latest QV House Price Index shows the housing market is under increasing pressure from rising interest rates.

Loan affordability constraints are limiting buyers, and those who are in the market are spoilt for choice as listing levels far outstrip demand.

The average home decreased in value by 2.2 per cent nationally over the past three-month period to the end of April, down from the 0.6 per cent decrease in quarterly value change the country saw in March, with the national average value now sitting at $1,040,927.

This represents an average annual increase of 14 per cent, down from 18.3 per cent annual growth last month.

Rotorua's residential property values dropped by an average of 1.5 per cent this quarter, with the average home value now sitting at $742,757.

Like the majority of NZ's main centres, QV property consultant Derek Turnwald says local real estate agents are seeing decreasing numbers of participants at auctions and open homes, even as growing numbers of properties continued to come onto the market.

'The highly valued suburbs of Lynmore, Springfield and Matipo Heights continue to experience reasonable demand, as do properties priced between $500,000-$750,000, albeit less than late last year.

'But the lower end of the market typically targeted by first-home buyers and investors is very subdued right now, most likely due to a lack of confidence in the market and tighter lending criteria from the banks.

'A review of the CCCFA is likely to result in an easing in lending restrictions in June, which could be good news for first-home buyers.

'Though there are generally very high levels of uncertainty among New Zealanders at the present time.

'Rising costs, rising interest rates, overseas conflict, and the ongoing Covid-19 situation have meant that confidence in the future economy and the housing market is low at present.”

Image: QV.

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