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Rise in home values slows to six-month low

NZ NewswireNZ Newswire 1/12/2016 Tina Morrison

Residential property values have increased at the slowest annual pace in six months in November, as tougher lending restrictions constrain buyers.

The average value of a New Zealand home rose 12 per cent to $624,675 in November from a year earlier, the weakest annual growth rate since May, according to state-owned valuer Quotable Value.

New Zealand's housing market has been on a tear, bolstered by record migration and low interest rates, prompting the Reserve Bank to tighten lending rules to reduce the risk to household balance sheets.

It added new restrictions on lending to property investors with high loan-to-value ratios in October and governor Graeme Wheeler noted on Wednesday that new tools such as debt-to-income lending restrictions weren't needed at this stage as house price inflation had moderated.

"The latest round of LVR restrictions have led to a weaker-than-normal spring as a reduction in demand for investor housing stock has resulted in more subdued value growth," QV's national spokeswoman Andrea Rush said.

Growth in Auckland house values increased at a 13 per cent annual pace in November, the slowest rate since January 2015, taking the average value for the Auckland region to $1.05 million. The rate of growth in Auckland peaked at 24.4 per cent in November last year and has since slowed following the introduction of the tighter lending rules.

Wellington regional house values increased 21 per cent to $565,631, although QV noted the market was slightly less buoyant as LVRs take effect. QV noted some sales had stalled during settlements as insurers refused to roll over cover to the new buyer, pending a building report, following the Kaikoura earthquake on November 14.

In the North Island, all areas posted an increase in residential property values over the past year.

In the South Island, the stand-out performer was the Queenstown Lakes District where values increased 32 per cent to top $1m. The Grey District was the only place to see values decrease over the past year, posting a 2.1 per cent decline to $207,837.

QV AVERAGE HOUSE VALUES (Nov 16)

* Queenstown Lakes District - $1m (up 32 per cent year-on-year)

* Tauranga - $665,155 (up 27 per cent)

* Hamilton - $536,565 (up 23 per cent)

* Wellington - $565,631 (up 21 per cent)

* Napier - $408,509 (up 21 per cent)

* Hastings - $375,175 (up 18 per cent)

* Nelson - $489,338 (up to 15 per cent)

* Auckland - $1.05m (up 13 per cent)

* Dunedin - $341,604 (up 11 per cent)

* Christchurch - $501,229 (up 4.3 per cent)

* Grey District - $207,837 (down a 2.1 per cent)

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