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Market update: It looks like those LVR restrictions are working

By Craig Catley

It looks like the Reserve Bank's plan is working. By putting speed limits on investment property lending of 40 per cent minimum deposits and restricting high-LVR loans even more in Auckland, the bank wanted to see growth pegged back to a more sustainable level.

And would you know it, the latest figures indicate that Auckland's value rises are slowing down. QV's monthly release of property values have shown that not only is Auckland back to around 10 per cent, but the North Shore in particular has made great strides towards a sustainable market.

Local results down – but that's not a bad thing

Property values decreased on the North Shore over the last three months – while that might scare some potential vendors, remember the long-term growth in local real estate has been excellent. REINZ figures from March show that North Shore house prices were up 7.2 per cent over a year, and 13.1 per cent on 2012 levels. A slowdown is just part of the natural property cycle.

Well-presented properties will always be on the radar of buyers.

As James Steele from QV points out, this slowdown (0.4 per cent reduction in values Auckland-wide last quarter) is because of the Reserve Bank actions last year.

"Demand is still down as tougher lending restrictions continue to make it difficult for buyers requiring a mortgage to obtain finance for their purchases," he said. Buyers that already own real estate with significant equity or people with high cash reserves were still very active in the market.

"Well presented properties in decent locations are still selling well although it's taking a little longer than when the market was very hot."In terms of what that buying market is looking for, Steele notes there is a distinct preference for certain homes.

So even though activity has slowed down from the fever pitch we have seen in the last few years, people with great homes in fantastic locations are almost evergreen in terms of buyers paying top dollar. Sounds like Takapuna real estate if you ask us.

Regional centres are on the up

While Auckland's tighter lending criteria restrict growth, investors have cast their eye on other parts of the country. Some of the biggest house price growth that QV recorded in the last year is found below:

  • Rotorua up 27.8 per cent to $396,423
  • Queenstown Lakes District up 23.7 per cent to $1,041,830
  • Hastings up 22.8 per cent to $408,510
  • Wellington up 21.2 per cent to $602,230
  • Tauranga up 17.5 per cent to $678,643

With interest.co.nz also reporting that yields are down on many parts of the North Shore, the overall data picture suggests investors are unlikely to be looking at North Shore property for significant growth in the near future.

But of course, that's not really what this side of the bridge is all about. North Shore real estate tends to be consistently popular with families looking for excellent schools, larger houses, proximity to beaches, and strong walkability bonuses – exactly what the bays and Takapuna area provide.

It's a combination of features which means that even as the Auckland market slows down, you could expect the North Shore residential market to continue ticking over. Of course, that doesn't mean you can just list and hope for the best – to give yourself the best chance of a great sale, make sure to use real estate agents that know the market like the back of their hand.

When you want a driven, successful team marketing your home at a time when demand is coming off its peak, it's time to talk to Ray White Takapuna.

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