Housing prices feel the chill as boom slows

The house price boom continues to slow, according to the latest residential property value survey.

Quotable Value statistics released today show average residential properties grew in value by about 12 per cent in the 12 months to March. The figure is 1.4 per cent down on the annual growth reported in February.

It comes after economists warned first-time home-buyers to stay out of the market as prices would fall.

But the Real Estate Institute said yesterday that the figures were a fluctuation rather than a trend.

Quotable Value put average growth in value at 13.5 per cent for February, but 12.1 per cent for January.

Blue Hancock, QV Valuations spokesman, said the figures showed a gradual slowdown. "The cooling of property values started in the major urban areas of New Zealand, and now has begun to extend into some of the provincial cities."

The survey shows several areas still had growth of more than 20 per cent over the year, including New Plymouth, Wanganui, Dunedin and Tauranga. But they are following the nationwide cooling, with Dunedin slowing by 5 per cent.

Only two areas experienced a decline in property values - a 5.2 per cent drop in Tasman and 4.3 per cent drop in Nelson. The decline was consistent with the February figures.

"Expect the trend of gradual slowing of property value growth to continue for most areas in the coming months," Mr Hancock said.

Garry Denley, from the Real Estate Institute, said the market was slowing down only in the numbers of properties sold. "We've got a lot of economists and people who work with figures saying it's all going to fall down around us, but we are simply not seeing that."

An average fall of 1.4 per cent was not a lot and was to be expected at this time of year, Mr Denley said.

The national average price for a house is $290,853, while in the Auckland and Wellington regions it is $393,347 and $328,441 respectively.

Last month BNZ chief economist Tony Alexander predicted a 10 per cent price drop in the next three years and suggested keen buyers should wait to take advantage.