House prices rise at fastest pace in nine years

New Zealand house values rose at their fastest annual pace in more than nine years, with the average home now worth more than $550,000, as the Auckland real estate market continues to surge despite new restrictions on buyers and sellers, according to Quotable Value statistics for October.

National property values surged 14% to an average $552,345 over the 12 months through October, the fastest pace of growth since March 2006, the state-owned valuer said in a statement. Values in Auckland jumped 24% to $918,153 over the year.

Demand for housing in Auckland, where migrants and investors are adding to competition for a shortage of housing stock, is spilling over into other parts of the upper North Island, with Hamilton and Tauranga recording strong value growth. The Reserve Bank of New Zealand 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, July and September.

In a bid to take the heat out of the market, the central bank this month introduced Auckland-specific lending restrictions, while relaxing the loan-to-value ratio rules on lending in other parts of the country. The government's own moves to crack down on property speculators and offshore investors have been in place since last month.

"While anecdotal evidence suggests that the market may have cooled somewhat in anticipation of regulatory measures being introduced by the government and the Reserve Bank, there is still no sign that this is having any impact on rising values in the super city region," said QV spokesperson Andrea Rush.

Values in Hamilton, which last month boasted faster annual growth than Auckland, reported an 18% increase over the past 12 months to an average $429,829. Tauranga values increased 14% year-on-year to $513,325.

Wellington values were 3.2% higher than they were a year ago to an average of $553,291, while Christchurch values increased 2.7% to $476,207 and Dunedin values rose 4.2% to $302,329.

(BusinessDesk)