New Zealand's housing market is unlikely to experience the sustained high level of value growth witnessed in the aftermath of last year's level four lockdown, a property expert says.
According to figures from QV, the average house price in New Zealand jumped from $752,327 in April 2020 - at the start of the first COVID-19 lockdown - to $913,209 a year later. By that point average quarterly value growth had reached 8.9 percent.
But that's been sliding recently, with data released by QV on Wednesday for August showing three-month growth at 3.3 percent, down from 4.3 percent in July. The national average value is now at $963,046.
"While prices were still going up as we headed into the latest lockdown, the growth was at a significantly reduced rate compared to earlier peaks," QV general manager David Nagel says.
"This is the fourth month running that we’ve seen a reduction in the nation’s rolling three-month average growth rate, so the market has clearly been cooling. Interestingly, value growth rates are very similar to the levels we saw in the middle of 2020 when New Zealand came out of our first lockdown."
However, that doesn't mean we will see a similar sustained rise in price growth after the current lockdown, with Nagel saying it will be different this time around.
The growth after last year's lockdown has been put down to pent-up demand, a large number of Kiwis escaping COVID-19 chaos overseas and returning to New Zealand putting pressure on supply, the Reserve Bank's removal of loan-to-value ratios (LVRs), and very low interest rates.
Nagel says one difference now is that the economy "is doing fine without the stimulus that was needed in 2020".
"Interest rates have nowhere to go but up, which was already signalled prior to lockdown, plus the rate of new builds is at an all-time high," he said. "But most importantly, house price inflation coupled with reducing credit availability has taken home ownership out of the reach of many New Zealanders.
"It's difficult to see the housing market return to anything like the growth levels seen over the past couple of years. The gap between supply and demand is closing rapidly, with borders largely closed and new houses coming out of the ground at record speed. More likely, we’ll see a soft landing for the current growth cycle, with the market settling into a new norm closer to the rate of inflation."
Growth rates softened this year as the Government announced a range of measures to tilt the market away from investors and towards first home buyers and the Reserve Bank re-introduced LVRs and began consulting on tightening them further. Interest rates are also anticipated to start increasing.
According to QV's August figures, the strongest quarterly growth was in Christchurch at 5.8 percent, down from 6.3 percent to July. It was followed by Napier (5.7 percent), which jumped from 3.7 percent in July. No centres saw a decline in value, but Marlborough had flat 0.3 percent growth.
In Auckland, the average value is now at $1,368,252, up 2.4 percent over the last three months with annual growth up 24 percent.
The largest annual increases were among regions in central New Zealand. Values in Manawatu-Whanganui jumped 36.7 percent over the last year, while the greater Wellington and Hawke's Bay regions saw annual growth of 33.5 percent and 32.9 percent respectively. The strong year-on-year growth in the South Island was the West Coast (33.3 percent).
QV's analysis of the market post-lockdown is similar to that of other market experts.
CoreLogic chief property economist Kelvin Davidson told Newshub last week that there might be "a bit of bounce" immediately after the lockdown, before a slowdown.
"Any house price growth after this lockdown is almost certain to be less than last time," Davidson said.