Property values surge at fastest pace in at least 10 months in April

New Zealand residential property values accelerated at their monthly fastest pace in at least 10 months in April as demand for housing in Auckland drags the country's real estate prices higher.

National property values rose 8.3 percent in the 12 months ended April 30, accelerating from a 7.7 percent pace in March, according to state-owned valuer Quotable Value. Auckland, the country's most populous city, led the index higher, with property values rising an annual 14.6 percent in April, speeding up from the 13.9 percent pace a month earlier.

New Zealand's net migration is sitting at a record annual inflow of 54,000, as fewer Kiwis leave for Australia and more expats return home, while incoming students and people on work visas have also increased. Half of the returning and new arrivals are headed for Auckland, where an under-supply of housing has pushed prices to record levels.

Reserve Bank governor Graeme Wheeler warned policymakers earlier this year that the city had a shortfall of between 15,000 and 20,000 properties to meet population growth. The central bank introduced loan restrictions in October 2013 to try and cool the market, while the National-led government has been leaning on the Auckland Council to free up land and relax planning constraints to help ease the shortage.

"With net migration at a record 54,000 and still rising, and 50 percent of migrants moving to Auckland, home values in the Super City are likely to remain high and keep rising during 2015 as demand continues to outstrip supply," QV spokeswoman Andrea Rush said. "Dunedin is the only main centre where values decreased slightly since February and the housing market there along with many other provincial towns around the country is showing flat or decreasing home values as the LVR (loan-to-value ratio) restrictions continue to make it difficult for first-home buyers to enter the market."

Property values in Hamilton rose 3.3 percent year-on-year, while its surrounding regions also made modest increases as demand from Auckland spilled over into the nearby city, said Chris Price, QV Hamilton valuer.

Property values in Wellington increased an annual 0.7 percent, with sales activity slightly softer in April than it was in March, QV said. Christchurch city values increased 4.7 percent over the past year.

(BusinessDesk)