- House prices rise 6.4 pct y/y in Nov
- Recovery from election-induced lull
- Buyers trying to beat new govt' regulations a factor - economist
(Recasts, adds economist comment)
New Zealand's house prices jumped in November as buyers rushed to get in ahead of new government regulations to crack down on property speculation slated for the first quarter of next year.
Quotable Value's (QV) residential property price index surged 6.4 percent in the year to November, dramatically picking up the pace from a five-year low of 3.9 percent the previous month.
The new centre-left Labour government, which took the helm in October, vowed to introduce rules to dampen property speculation, including a ban on foreigners buying existing homes and expanding taxes imposed on investment properties. nL4N1N6241]
The prospect of those changes drove up prices in the immediate post-election period, economists said.
"It is classic behaviour leading up to regulatory changes. You may...see Kiwis arranging their affairs ahead of tax changes coming up," said Dominick Stephens, chief economist at Westpac Bank
Anecdotes of foreign buyers trying to get in ahead of the ban suggested that foreign demand was also pushing up prices.
The rate of growth suggested the country's house price boom was not yet completely over, despite the central bank this month predicting house prices would continue a slowdown that began at the start of this year.
That prompted the central bank to announce it would ease back its macro-prudential mortgage lending curbs at the start of 2018.
"The easing in loan-to-value ratio restrictions in January and retail banks' lending criteria is likely to help improve activity and demand in the housing market as we move through the summer months," QV spokeswoman Andrea Rush said in an emailed statement.
The index is now 60.4 percent above the market's previous peak in late 2007.
Most of the gains were in smaller cities including the capital, Wellington, where prices rose 9.8 percent and Dunedin which saw values jump 13.1 percent.
Auckland, the country's commercial centre, remained sluggish, falling 0.5 percent on an annual basis although values picked up a little on a quarterly basis, rising 0.4 percent.
Even though prices were expected to surge for the next few months, economists warned a slow-down was likely in the next year.
"Our view is house prices will fall in 2018 as these tax changes and the foreign buyer ban is introduced and sentiment weighs a little," said Westpac's Stephens.
