House prices rise at fastest pace in eight years, Auckland up 18.8%: QV

New Zealand residential property values rose at the fastest pace in eight years in July, driven by the overheated Auckland housing market, and are now about 27% above the previous market peak in late 2007, according to state-owned agency Quotable Value.

National property values accelerated 10.1% in the 12 months through July to $527,760. Values in the Auckland region surged 18.8% to $855,672, the fastest pace since 2004, QV said. Auckland values have climbed about 57% since 2007. North Shore average property values topped $1 million for the first time in the latest QV survey, joining Auckland city properties in achieving that distinction.

Demand for housing in Auckland, where migrants and investors are adding to competition for a stock of housing that isn't keeping up with demand, is increasingly driving activity in the wider 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.

"We are now seeing a definite upward swing in market activity in the upper North Island," said QV spokeswoman Andrea Rush. "This is especially evident in Hamilton but also in Tauranga, Whangarei and the Franklin, Hauraki and Waikato districts."

"Net migration remains at record highs and there are now incentives for new migrants to move to areas outside Auckland so this, coupled with record low interest rates, is likely to see continued upward pressure on home values as we move towards spring," Ms Rush said.

In Hamilton, the average rose to $390,113 and the QV House Price Index for the city is up 7.4% year on year. Tauranga prices have risen 7.7% in July from a year earlier to reach an average $489,734.

Home values in Wellington rose 2% year on year to reach an average $546,481, while in Christchurch, values appear to be reaching a plateau, gaining just 3.1% in the past year and 0.5% in the past three months to average $475,322. Values in Dunedin rose 2.8% to an average $298,928 and in Invercargill, values slipped 0.1% to an average $207,367.

(BusinessDesk)