KEY POINTS:
Figures showing a surprisingly strong rise in house prices over the past year are being downplayed by two of the country's major banks.
ASB chief economist Nick Tuffley said the shock finding from Quotable Value's monthly report - that national property values rose 13.3 per cent for the
year ended August - was out of line with other surveys.
He said Reserve Bank governor Alan Bollard will not be hiking interest rates on the back of the QV figures when the market in reality is slowing.
Prices were "likely to remain on hold going forward", Mr Tuffley said this morning.
Senior economist from the ANZ Bank Khoon Goh said the slowing of the real estate market is likely to continue for the rest of the year.
"We don't think it's a winter thing. Winter is typically slow but this is slower than usual," Mr Goh said.
He said past interest rate increases are starting to have an impact and net migration is easing.
"They are combining to slow the housing market," Mr Goh said.
The Real Estate Institute of New Zealand released figures last month showing a decrease in the national median house price between the months of June and July.
The institute is due to release updated figures today or tomorrow and Mr Tuffley said they are likely to continue the trend of last month's decline.
"The sales growth is looking modest," Mr Tuffley said.
The QV figures for the year ended August were up from a 12.7 per cent increase in July, to the fastest rate of increase in 16 months.
That was despite rising interest rates, slowing migration, and a volatile currency, QV spokesman Blue Hancock said.
Ultimately, a fall in the number of buyers meant there was no downward pressure on prices, despite the smaller number of listings over winter.
The trend has quickened since QV put the rate of annual growth at 8.8 per cent in January. The market rose to a record high $394,397 over the period, up from $381,298 in July.
"It's just that confidence with people having dollars in their pockets and jobs, and if the market's rising at this pace they've got to get in now if they can afford to pay that interest bill," Mr Hancock said.
The data in QV's monthly report is based on sales over the three months ended August, compared with a year ago.
The figures do not reflect the recent finance company collapses, which have dented market confidence and panicked investors into putting their money into other assets.
Auckland's property values rose by 12 per cent over the past year, up from 10.2 per cent in July. Wellington was up 14.5 per cent from 14.7 per cent, and Hamilton rose 14.1 per cent from 13.6 per cent.
More housing data is expected in the next few weeks from the Real Estate Institute, which has shown a decline in the national median house price for two consecutive months after hitting $350,000.
- with NZPA
