Dawn chorus: 'The govt was right to panic'

CoreLogic confirms frenzy of housing demand in months before last week's interest deductibility shock; Prices rose at annualised rates over 30% in Taranaki, central Hawkes Bay, Gisborne and Gore in Q1

TLDR: CoreLogic’s March quarter data out this morning shows house values were rising at annualised rates of 20-40% in cities up and down the country in the three months before last week’s big interest deductibility shock.

CoreLogic sees the package taking pressure off the RBNZ to introduce tough interest-only loan limits with its Financial Stability Report on May 5, but believes a mass pull-back by investors as unlikely.

“Despite the market being tipped further in the balance of first home buyers we’re not expecting a significant exodus or pull back from investors,” CoreLogic’s Nick Goodall said. “The long-term appeal of property investment remains – using debt to access a valuable asset and having ‘someone else help pay off your mortgage’ in a bid to provide passive income and wealth in retirement,” he said.

“The Prime Minister’s continued commitment to protecting the value of that asset should also provide confidence to current owners and future buyers.”

Fair enough.

CoreLogic data showed annual inflation across NZ of 16.1% in March with annual inflation rates rising over 30% in parts of Auckland, Taranaki, central Hawkes Bay, Gisborne, Napier, Rotorua, Palmerston North and Gore. Rates annualised from first quarter rises were mostly in the 20-40% range.

CoreLogic sees few signs of panic yet. Appraisal numbers through agents remained consistently high throughout March, indicating sellers have yet to freeze their sales to avoid losses in a weak market. Mortgage related valuations ordered by banks had already started to fall in the second half of March, but stabilised at the end of the month, despite the surprise housing moves.

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