New Zealand Property Values Rise 8.4%

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Thursday, October 10th, 2013
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New Zealand property values rose at an 8.4 per cent annual pace ahead of the introduction of low-equity home lending restrictions, with the increases driven by a shortage of houses in Auckland and Christchurch, according to state valuer Quotable Value.

Auckland property values rose at a 13.6 per cent annual pace in September while Christchurch values are 10.8 per cent above last year, the agency said.

The national pace slowed from an 8.5 per cent annual growth in August.

“Nationwide values continue to rise, driven primarily by Auckland and Canterbury where high demand and short supply are pushing prices up,” QV research director Jonno Ingerson said in a statement.

“Most of the rest of the main cities and provincial towns are also increasing but at a much more modest rate.”

Rapidly accelerating house prices in the country’s two biggest cities raised fears of an asset bubble emerging and prompted the Reserve Bank this month to impose restrictions on high loan-to-value ratio lending.

The restrictions will take time to impact the housing market as bank customers with pre-approved loan applications rush to secure a property before their approval expires, Mr Ingerson said.

“While the LVR caps may have an impact on first home buyers with limited deposits, it is likely to have little impact on other buyers,” he said.

“What remains to be seen is whether the overall activity and price levels in the market are affected, particularly in areas with more affordable properties.”

The Reserve Bank has signalled interest rates are set to rise from a record low 2.5 per cent next year and further increases are likely should LVR limits fail to stem rapidly rising house prices.

Population expansion in Auckland is outpacing housing supply while Christchurch is being rebuilt following a series of earthquakes.

In other major centres, Wellington house values rose at a 2.9 per cent annual pace while Hamilton increased 3.9 per cent, Dunedin gained 1.8 per cent and Tauranga edged up 0.6 per cent.

Source: AAP
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