House prices plateau in Palmerston North
Palmerston North house values are plateauing and substantial change is unlikely as the threat of interest rate rises hits home.
The value of the average house in Palmerston North increased by 1.6 per cent on the year to December, the weakest increase since March 2012, Quotable Value figures show.
Real Estate Institute Manawatu spokesman Andy Stewart said the city had gone into a phase that would make it hard for property values to rise or fall, possibly for some time.
"It seems like it's falling into one of those periods where we just plateau."
The threat of interest rate rises and the effects of loan-to-value ratio speed limits recently imposed on the housing market by the Reserve Bank had buyers looking at the market with caution, he said.
The number of properties on the market was also lower, Mr Stewart said.
"I don't envisage any rise in property values so we're hoping for the volumes to pick up over the month to give us a bit of buoyancy."
QV research director Jonno Ingerson said LVR speed limits were likely to have an impact on the market for at least the first half of 2014.
"As is usually the case over the Christmas break, people tend to rethink their options. This may be particularly the case this year.
"Outside of Auckland and Canterbury there isn't the same imbalance between supply and demand. There generally aren't multiple purchasers vying for the same property, so the LVR speed limits are likely to significantly decrease demand and therefore prices.
"The other big influence on the property market this year is going to be the upcoming increase in mortgage interest rates."
Consumer confidence, "a strong driver of the property market", could be affected by this in coming months, Mr Ingerson said.
Nationwide values were likely to increase only modestly this year, but that would probably be as a result of everywhere outside of Auckland slowing while the Auckland market itself would continue to increase, he said.