New Zealand residential property values have climbed at the fastest pace in nine months, led by strong demand in Auckland.
National property values rose 7.7 per cent over the past year to March, accelerating from the 6.4 per cent increase in February.
It’s the fastest pace since last June, according to state-owned valuer Quotable Value.
Auckland, the country’s most populous and fastest growing city, led the QV index higher, with property values advancing 13.9 per cent, ahead of the 13 per cent rise the previous month.
“The expectation is that Auckland will continue to accelerate while the rest of the main centres will remain steady with values either moderately increasing, staying flat or in some cases declining slightly,” QV spokeswoman Andrea Rush said.
The Reserve Bank is concerned that an overheated property market could lead to financial instability and has flagged the introduction of further macro-prudential tools to help cool the market, without having to raise the official cash rate any further.
“The Reserve Bank is considering tighter rules on borrowing to property investors which it has said may now be defined as those who own more than one property and thus could cover any property the owner does not live in,” Ms Rush said.
“Currently close to 40 per cent of all residential house sales in New Zealand are purchased by those who own two or more properties and the Reserve Bank’s changes could come into effect as early as July 1 this year.”
Demand from the Auckland market is also spilling over into nearby regions, QV said.
Residential property values in Hamilton rose an annual 3.4 per cent, with houses going to auction “reaching good prices due to high demand”.
“Aucklanders are still coming down to Hamilton to purchase properties, either to move here permanently or to invest in the relatively more affordable homes here,” QV Hamilton valuer Nicky Harris said.
“Investors are still very active in the Hamilton property market.”
Property values in Wellington increased an annual 0.5 per cent, Christchurch values rose 5.3 per cent, Dunedin gained 0.6 per cent and Tauranga advanced 5.1 per cent.