NZ house values accelerate at fastest annual pace in 8 years

NZ house values accelerate at fastest annual pace in 8 years, pushed by Auckland surge

By Suze Metherell

Sept. 1 (BusinessDesk) - New Zealand residential property values rose at their fastest annual pace in eight years in August, pushed higher by overflowing demand in Auckland, which is showing signs speculators think it has reached its peak, according to Quotable Value.

National property values advanced 11.3 percent in the 12 months through August to an average $543,331, the state-owned agency said in a statement. Values in Auckland jumped 20.4 percent over the same period to $874,851, outpacing a 13.9 percent rise in the national average value for urban areas to $637,912.

Demand for housing in the country's largest city, where migrants and investors are adding to competition for a shortage of housing stock, is increasingly driving activity outside Auckland and into other parts of the upper North Island. The Reserve Bank has singled out Auckland property prices as a key risk to New Zealand's financial stability, while at the same time cutting its benchmark interest rates in June and July.

"High prices and lower yields in the Auckland market appear to be encouraging investors to look to regional centres around the country for investment properties," QV national spokeswoman Andrea Rush said. "The new rules set to come in over the next couple of months requiring a 30 percent deposit for investment property in the Auckland region and a softening of the LVR (loan to value ratio) for the regions may also be factor incentivising this activity."

QV figures show more than 2,000 homes in Auckland were bought and sold multiple times in the past 12 months, which the valuer said points to speculators pushing up the real estate market.

"There is continued evidence of high levels of speculation in the Auckland market and we are seeing more examples of price taking where the same properties are selling two or three times in a one-year period," said Jan O'Donoghue, QV's northern homevalue operations manager. "Rapid on-selling can be a sign some speculators may believe we are close to reaching the top of the market and decide they have made enough profit."

Speculation has spread to local regions. Hamilton city's property values have gained 10.3 percent over the past year to an average $400,811. Tauranga city values advanced 8.6 percent in the year to $493,054.

Wellington values increased 2.4 percent to $546,914, while Christchurch rose 3.1 percent to $476,317 and Dunedin gained 3.7 percent to $299,508, making it one of the most affordable main centres in the country, QV said.

(BusinessDesk)

© Scoop Media