House price growth rate lowest since Sept 2020 as property market loses strength
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Loading... - Freya Darren
- 02 Mar 2022
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The property market is losing its strength as rising interest rates and stricter lending rules have resulted in house price growth falling to its lowest point in 18 months.
CoreLogic's House Price Index, which measures the changing value of property, rose 0.8 per cent in February, taking the national average house price to $1.04 million.
It was a sharp drop on January's 2.1 per cent growth rate.
CoreLogic head of research Nick Goodall said it was the lowest rate of growth since September 2020, which marked the start of an exceptional 18-month growth phase.
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Despite the growth, analysis of very recent sales showed sentiment was rapidly changing in the market, CoreLogic said.
Recent lending data from the Reserve Bank had revealed a significant drop in mortgage activity, despite more properties coming to market.
This was due to the higher costs of credit as the RBNZ hiked interest rates to rein in inflation, tighter lending restrictions, and controversial changes to the Credit Contracts and Consumer Finance Act (CCCFA), Goodall said.
The latter has been in operation since December but has already drawn severe criticism for causing people with previously good credit records to be refused finance.
"Our expectation is the HPI will dip further over the coming months as continued rate hikes and tighter credit controls weigh on market conditions," Goodall said.
Looking ahead, the government's review of the CCCFA changes may see credit conditions loosen, but for now, the outcome remained uncertain, he said. Read More…
