Average Auckland house price tops $1m, QV says

The average Auckland home now costs more than $1 million as less activity fails to curb house price growth in New Zealand's biggest city, says state-owned valuer, Quotable Value.

The average value of a New Zealand home rose 15 percent from the year earlier to $612,527 in August, still slower than the 16 percent gain in Auckland property values which took the average value in the region to $1,013,632, QV said in a statement. That's the first time average Auckland property values have topped $1 million, and they are now 85.5 percent higher than their previous peak of 2007.

New Zealand's housing market has been bolstered by record migration as more people compete for a limited supply of housing, while record low interest rates stoke investor demand, with the cost of servicing increasingly large mortgages making the Reserve Bank uneasy about household balance sheets.

In July, the central bank indicated it would extend mortgage lending restrictions on Auckland property investors to the rest of the country, requiring a bigger deposit and reintroducing a uniform national cap on highly leveraged owner-occupier mortgages. At least 95 percent of banks' lending to investors will require a 40 percent deposit, and a 10 percent limit for owner-occupiers wanting to take out a mortgage with a deposit of less than 20 percent will be restored.

The restrictions will be introduced in October, having been initially due to be implemented in September, after the major banks responded to the July announcement by adopting the new rules early.

QV general manager Jan O'Donoghue said activity surged ahead of July's LVR announcement, but there had been a noticeable easing in market activity in Auckland over the past few weeks, with more homes failing to sell at auction.

“We saw a similar trend about this time last year when new LVRs of a 30 percent deposit were announced for investors in the Auckland region," O'Donoghue said. “So it’s most likely this change in the market is being caused by the latest LVR restrictions requiring a 40 percent deposit by investors as well as the continued lack of stock listed for sale in the market. However, a shortage of listings and lower sales volumes do not seem to have impacted on value growth as yet they are still increasing.”

The LVR restrictions adopted by banks appear to have had an impact on housing markets in Tauranga and Hamilton as well, QV's national spokeswoman Andrea Rush said.

Hamilton's annual values rose 29 percent to $518,387 in August while Tauranga city values gained 29 percent to $633,638. Rush said market valuation requests, auction clearance rates, open home attendees and loan application rates had all dropped off in both centres in recent weeks.

In the Wellington region, values rose 17 percent in the year to an average $536,065. Napier home values increased 16 percent to $386,615 and Hastings values advanced 15 percent to $359,679. 

In the South Island, Dunedin city home values rose 12 percent annually to $333,890, Nelson home values gained 14 percent to $473,624, while Christchurch's home values rose just 3.5 percent to an average $492,766.

“There is a shortage of properties listed for sale in the market which is resulting in fewer sales and anecdotally, listings are around 30 percent lower than they were this time last year," valuer Damian Kennedy said. "Agents are hoping it is just a more pronounced annual seasonal slowdown we see during the colder winter months. Investors may also be waiting to see if the market picks up again now that the rate of growth has slowed from what it was in the first three years after the earthquakes."

(BusinessDesk)

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