December was a solid close to a strong year for the New Zealand property market. House prices were considerably higher than December 2020, demand and sales activity remained firm, and there was a welcome increase in new listings through November and into December.
Median prices for residential property across New Zealand increased annually by 21.5%, from $745,000 in December 2020 to $905,000 in December 2021. Though year-on-year growth continues, this was a 1.6% decrease compared to a November 2021. The median residential property price for New Zealand excluding Auckland increased annually by 20.6% from $630,000 to $760,000 — a 1.3% decrease from November 2021. Auckland’s median residential property price increased 25.9% annually from $1,025,000 in December 2020 to $1,290,000 in December 2021 — down a marginal 0.8% on November.
When we consider the seasonally adjusted median prices, which assesses a month’s performance outside of predictable seasonal patterns, December price movements were as expected. However, we may be seeing signs of deceleration in annual price growth compared to previous months. While the market remains confident, the impact of rising interest rates, tighter lending criteria and changes to investor taxation restrictions are starting to shift dynamics. The amendment to the Credit Contract and Consumer Finance Act (CCCFA) introduced on 1 December 2021 — which requires stricter scrutiny of borrowers’ financial health — seems to be having an immediate effect. We are starting to see a falloff in buyer numbers — particularly first-time buyers — as a result.
It is yet to be seen the impact of these changes and anticipation of how further interest rate increases are likely to play out in the market, which could lead to a gradual slowdown in the pace of price growth. Want to know how this could impact you then give Victoria a call –
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