New Zealand's housing market is hitting the brakes. Quotable Value's (QV) latest House Price Index shows increases of just 0.3 per cent nationwide over the last quarter, while annual growth is the slowest it's been in two years.
While many may see it as cause for alarm, it's important to place this in context. The slowdown is in growth – the car isn't moving as quickly down the road, but it's still moving forward – capital gains are still on the rise for owners of North Shore property.
But how long does the slowdown last? And will it ever turn into a full-on decline?
While all growth is good, the slowdown will have some people concerned. As QV National Spokesperson Andrea Rush explains, there are a few primary factors at play here:
"Nationwide value growth continues to ease back due to lower demand in the housing market caused by the latest round of LVR restrictions and tougher lending criteria from the banks as we head into the winter period."
She also hinted at housing market uncertainty due to the political landscape, suggesting that in an election year we may not pick up the pace until ballots have been cast.
For those interested in North Shore property, this may not be as much of a problem. Coastal and North Harbour properties have increased in value over the last three months, and a 1 per cent drop in Onewa still sees the region sit 7.4 per cent higher than the same time last year.
This compares well to areas like Auckland's eastern suburbs, where the drivers of slowdown have had a more pronounced impact. Kohimarama, Mission Bay, Ellerslie and Meadowbank were all among areas that fell by more than 1 per cent.
As Ms Rush noted, the election campaign could see a lot of people stay out of the housing market until they have a clearer idea of what the next three years will look like. Furthermore, if Australia is any indication, then investor demand should slowly creep back up again over time – the immediate slowdown could partly be a knee-jerk reaction to our Reserve Bank's clampdown on lending practices and volumes.
Noone has a crystal ball, but it seems unlikely that North Shore property growth will pick up the pace in a huge way until at least later in the year. Winter is often a time when demand for buying real estate slows down further, before the traditional spring selling season.
Even with this reduction in speed, QV's James Steele remarked that the slowing of the Auckland market isn't even a shift to below average conditions – rather, we're moving back to "normal market conditions".
This slowdown in property price growth is a natural part of the property cycle and nothing to be too worried about. Real estate is a constant oscillation between periods of slowing down and speeding up – after the incredible growth of the last few years, it's natural that heat will come out of the market somewhat.
For those that want to buy property around Takapuna, the dampening impact this has had on demand could mean a great window of opportunity to buy. And for those that want to sell, lower demand means you need to make sure you work with the experts. Whatever your goals are, sit down with the team at Ray White Takapuna and we'll help you achieve them.