Loan rules hit house sales
Property value increases in Nelson and Tasman reflect strong population growth, but the tightening of rules on lending has started to show, Quotable Value Nelson says.
"Sales volumes are up in 2013 compared with 2012 but they have dropped away since loan-to-value ratio [LVR] rules were introduced," manager of QV Nelson Richard Kolff said.
The LVR is a measure of how much a bank lends against residential property, compared to the value of that property.
In December 2012 89 houses were sold in the region and 69 in December 2013, Mr Kolff said.
Nationwide residential property values increased further in December, according to the latest QV monthly property value index.
Values are up 3 per cent over the past three months, 10 per cent up over the past year, and 12.5 per cent above the previous market peak of late 2007.
Mr Kolff believed figures in Nelson and Tasman were also a reflection of "catch up" from a significant drop [10 to 15 per cent] in the market after 2007.
QV research director Jonno Ingerson said nationwide values increased steadily throughout 2013, with the year ending 10 per cent above the previous year, driven mainly by strong increases in Auckland, and to a lesser extent Christchurch.
He said the provincial centres showed less of a clear trend over 2013 than the main centres, but Nelson and New Plymouth stood out.
"Relative to the previous market peak, only New Plymouth and Nelson are beyond that level by 4.5 per cent and 5.1 per cent respectively.
"Most of the other centres remain a few per cent below peak, while Whangarei, Gisborne and Wanganui are over 15 per cent below, as all three of those areas did not show the same recovery in the market in 2009 and 2010 that most of the rest of the main centres did," Mr Ingerson said.
He said that compared to 2012, sales volumes dropped a few per cent in many of the provincial centres.
"The notable exceptions were Whangarei, New Plymouth and Nelson where sales were well above the year before," he said.
Mr Ingerson said that apart from the influence of new lending rules the other big influence on the property market this year was going to be the upcoming increase in mortgage interest rates.
"The last two or three years have been characterised by historically low interest rates which have encouraged people into the market," he said.
"As rates rise later this year as they are expected to, this will increase the cost of servicing mortgages which in turn will lead to people borrowing less and therefore offering less for properties."
Do you agree with the city council's decision to put a 30-minute limit on buskers' performances?Related story: (See story)