December Sales 2017
The month of December ended the year on a strong note with house prices up 5.8% for the 2017 calendar year. Of the 16 regions in the country, 13 saw prices increases in December. Only Marlborough, West Coast and Canterbury were negative.
New record high prices were recorded in Waikato up 11.7%, Jan-Dec to $525,000. The Bay of Plenty was up 20.4% to $598,000 and Wellington up 4.7% to $560,000. The number of sales across NZ fell compared to December 2016.
Every month of 2017 showed lower sales numbers compared to the same month in 2016. It was a difficult year with the reserve bank restricting bank lending to both investors (LVR = 40% deposit) and people buying to live in (LVR = 20% deposit).
The uncertainty leading up to the general election, then who would govern after the election and the three party coalition government that is now formed all took their toll on confidence. This in turn effected the number of sales and prices.
What Will Happen To The Housing Market In 2018
2017 saw a major change in the New Zealand housing market. First of all the reserve bank’s earlier introduction of the LVR (loan to value ratio) increasing first home buyers deposits to 20%* and buyers of rental properties to 40% began to take their toll.
The number of sales fell significantly during 2017 and the level of price increases each month fell but largely remained positive. The below map shows the results for the year. The net result was a 5.8% increase in New Zealand for the year.
LVR restrictions were eased very slightly in November last year to take effect on the 1st of January 2018. As well as the LVR effect the market was held back awaiting the general election results and what new changes the future government may put in place.
Despite the change in government with it’s policies which have a negative effect on house prices. Such as reduced immigration, capital gains tax, no sales of existing houses to overseas buyers (except Australians) and increased demands on landlords, prices are likely to rise in 2018.
There is no getting away from the fact that there is a shortage of houses in many parts of the country. The demand is growing – population growth is continuing and will probably stay that way in 2018.
The severe LVR and landlord unfriendly activity are already showing up as a dire shortage of rental properties in many cities and towns. The result is and will continue to be rapidly rising rents. So for 2018 reasonable levels of property sales, small increases in prices and large increases in rents is the probable scenario ahead.
*Very small number of buyers allowed with a 10% deposit.