NZ property values rise at 8.1% annual pace in July on demand in Auckland, Christchurch
By Tina Morrison
Aug 8 (BusinessDesk) – New Zealand property values rose at an 8.1 percent annual pace last month, as demand continued to
outstrip supply in Auckland and Christchurch, according to state valuer Quotable Value.
Growth in property values accelerated from last month when they increased at a 7.6 percent annual rate, also driven by
demand in the nation’s two largest cities. Values increased 3.1 percent in the three months ended July 31, up from a 2.8
percent quarterly pace in June, the agency said.
“Values continue to rise, although still primarily driven by Auckland and Christchurch,” said QV operations manager
Kerry Stewart. “Most of the rest of the main centres are also increasing but at a much slower rate.”
Most economists expect New Zealand’s Reserve Bank to raise the benchmark interest rate from a record low 2.5 percent
next year in part to contain the housing market in Auckland, where a supply shortage has driven up prices, and
Christchurch, which is being rebuilt following a series of earthquakes.
Of the major centres, Auckland values are up 12.8 percent from a year earlier, while Christchurch values increased 10.8
percent and Wellington values gained 2.8 percent, the agency said.
“Lack of supply continues to heavily influence the market, but other factors may be playing a role in the continual
increases, including the low interest rates still prevalent, an increasing population as well as incentives for both
investors and first home buyers in the form of capital gains and Kiwisaver schemes,”
Stewart said.
The central bank is considering the use of new macro-prudential tools to restrict the volume of low equity mortgages as
pressure in the housing market poses a risk to financial stability. The bank said in May that it planned to clearly
explain its concerns before using any of its new tools, in the hope it may change behaviour and prevent their use.
The latest house sales figures show a bigger slowdown since May than can be attributed to winter alone, suggesting banks
have already pulled back on some lending, QV said.
The slowdown in sales activity “appears to be due to a decrease in sales activity and a decrease in home loan
approvals,” said QV’s Stewart. “The latter is due to many main banks already tightening their lending policy in
anticipation of policy changes from the Reserve Bank.”
Last month, economists at five major banks surveyed by BusinessDesk said the Reserve Bank could use its new tools to
restrict low equity loans as early as this month, following consultation.
House values are 7.5 percent above the previous market peak of late 2007, QV said.
House prices in New Zealand are 25 percent over-valued, the International Monetary Fund said in May.
Provincial centres are patchy, however most values are still up on last year, QV said.
(BusinessDesk)