NZ property values rise at 8.4% annual pace in Sept, QV says
NZ property values rise at 8.4% annual pace in September, led by Auckland, Christchurch, QV says
By Tina Morrison
Oct 9 (BusinessDesk) – New Zealand property values rose at an 8.4 percent annual pace last month 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 percent annual pace while Christchurch values are 10.8 percent above last year, the agency said. The national pace slowed from an 8.5 percent 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, 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,” Ingerson 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 percent 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 percent annual pace while Hamilton increased 3.9 percent, Dunedin gained 1.8 percent and Tauranga edged up 0.6 percent. Provincial centres are increasing at no more than 2 to 3 percent over the past year, the agency said.
Nationwide values increased 2.6 percent over the three months to the end of September and are now 9.2 percent above the previous market peak of late 2007, the agency said.