The latest QV House Price index figures for January show that while home values across the Auckland region rose 12.8 per cent over the past year, quarterly growth slowed to 0.2 per cent and values dropped in parts of the North Shore, Waitakere, Manukau and Auckland City South in the three months since November.

When I was writing this column a year ago, the Auckland region had seen values jump 19.8 per cent in the year since January 2015, but similarly quarterly growth had dropped by 0.5 per cent since November and values were decreasing in Auckland Central, the North Shore, Waitakere and Manukau.

On both occasions this drop was due to the Reserve Bank imposing loan-to-value ratio restrictions on those purchasing investment properties in the October prior.

In October 2015, a 30 per cent deposit rule was imposed on investors in the Auckland region only; and in October 2016 this was upped to 40 per cent for anyone bu an investment property anywhere in New Zealand.


Despite the 30 per cent LVR restrictions in Auckland, by April, last year values in the Auckland region had started to rise again and they continued rising each month for the rest of the year - albeit at a slower rate than they had prior to the 30 per cent LVR being imposed (October 2015) but fast enough that by September the QV House Price Index average value had topped $1 million.

Though we might expect to see a similar trend this year, a few factors are different. The 40 per cent LVR is substantially higher than the 30 per cent one and is beginning to impact on the proportion of sales to investors in Auckland, which according to the latest CoreLogic Buyer Classification data is now 42 per cent - down from a 43 per cent high in 2016.

Also, at this point last year, interest rates were picked to drop, while this year, despite the Reserve Bank keeping the OCR at a record low 1.75 per cent earlier this month, it's expected the banks will push up mortgage interest rates during the year.

This may further constrain the rate of value growth, along with any on-going impact of the 40 per cent LVR restrictions.

However, any slowing in the market will be balanced by continued record high net migration and the fact new homes are not being built at nearly the same rate as the numbers of people moving to Auckland.

Add to this the fact that New Zealand property can still be purchased freehold by foreigners and there are fewer taxes on property here compared with many other countries.

New Zealand is likely to remain an attractive investment to foreign buyers and given concern over the Trump administration there may be higher demand from overseas buyers to purchase a safe haven in this country.

Given right now we do not know exactly how much property is already owned by foreigners not living here, as we do not collect data on this, it is difficult to ascertain exactly what impact foreign buyers are having on the rate of property value growth.

Until we measure this, it will continue to remain an unidentified factor in the property market.