Property price rises cool off

Property price rises have eased for the first time since March but experts say it is still too early to signal a market slowdown, despite interest-rate increases and falling investor returns.

The latest Quotable Value residential price movement report shows property values rose 14.5 per cent for the 12 months to October, down from 14.9 per cent growth to September.

The figures come as the Government looks at ways to curb lending, such as limiting the amount of money banks can lend on a property's value, to cool the housing market.

The Reserve Bank is worried that interest-rate rises are not flowing through to mortgage lending, which continues to stoke inflation.

Quotable Value spokesman Blue Handcock said that to be certain the market was slowing down, there needed to be a consistent trend downwards in growth.

"Regardless, we do expect at least a levelling of growth in the property market given expected interest rate rises, falling investor returns and also a slowing population growth rate," he said.

David Tripe, Massey University's head of banking studies, said there was little difference between the September and October figures and no signs of a big slowdown in banks' housing lending.

He had stopped predicting a cooling in the housing market but warned that people who expected a continual increase in prices were unrealistic.

"Sooner or later things should slow down and to some extent the sooner it slows down the less impact it will be in other areas [of the economy]."

Real Estate Institute president Howard Morley said the market had been levelling off for the past four months but it was still fairly buoyant, with a shortage of listings.

Whangarei gained the most, with growth of 30.9 per cent in the 12 months to October.

But the highest average price remained in Auckland.

The average for a home in East Auckland was $585,274, second was coastal North Shore with $535,271 and third was Queenstown ($522,029).

The Auckland City market experienced 4.9 per cent growth in the 12 months to October, down from 5.8 per cent growth to September. Across Auckland as a whole, the market was down a fraction to 8.2 per cent in October from 8.3 per cent in September.

Quotable Value said the under-$500,000 market in Auckland remained active.