Housing market

PHOTO: NZ’s property market. GETTY

Property prices will continue to rise in 2021 – although at a considerably slower rate, according to an expert.

The wild trajectory of the New Zealand property market – which has seen house prices skyrocket to record levels this year – may begin to cool towards the end of the first quarter, says David Nagel, the general manager for Quotable Value (QV), a leading state-owned valuation and property services company.

“A shortage of listings, record-low interest rates, and the looming re-introduction of loan-to-value ratios (LVRs) means that the property market is in for a hectic summer yet,” Nagel said in a statement on Monday.

However, he believes that when LVR limits – the size of a loan in comparison to the value of a property – are reintroduced from March, the property market will also slow. LVRs restrict how much banks can lend to low-deposit borrowers.

In late November, the Reserve Bank announced that subject to final consultation, it intends to restore LVR restrictions to previous levels from March 1, 2021.

“I’m predicting we’ll see something more akin to 2019 levels of growth again, when prices increased by an average of 4-5 percent nationally, as opposed to the rampant double-figure growth that we’ve witnessed during the back half of this year,” Nagel said.