The latest monthly QV House Price Index released yesterday showed that nationwide residential property values for June have increased 13.5% over the past year.
The Auckland market has increased 16.1% year on year and 4.7% over the past three months with values now 78.4% higher than the previous peak of 2007 and the average value in the Auckland region now at $975,087.
QV national spokesperson Andrea Rush said, “Nationwide values are now rising at the fastest rate since 2004, up 5.6% over the past three months alone and the nationwide average value is now nearing $600,000.
“Many housings markets around the country are continuing to be driven by strong investor demand, low interest rates, rapid price growth in the Auckland market and strong net migration.
“The latest CoreLogic Buyer Classification data shows the share of sales in Auckland to investors is now at 46.0% of all sales, up from 37.0% in 2012.”
Rush said as the Reserve Bank considers introducing further restrictions on investors, this may have led to a surge in investor purchases over the past month.
“With the Proposed Auckland Unitary Plan (PAUP) implementation recommendations due this month, it’s hoped this will provide for much needed new housing supply and infrastructure for the growing Super City region to alleviate upward pressure on property values.”
QV homevalue registered valuer, James Wilson said, “Throughout June we’ve seen a continuation of the buoyant market conditions in the Auckland housing market.
“There’s still a shortage of listings and well-presented properties are moving increasingly quickly, in some cases offers are made and accepted without the property reaching the wider market and we continue to see high levels of speculation in the market.”
“Investors appear to be heeding the recent warning by the Reserve Bank that further policy measures may be introduced later this year to curb investor activity in the housing market.”
“This appears to have led to a surge in investor activity with many seeking to acquire as many properties as possible under the current rules before any further restrictions are introduced.”
Wilson says the increase in activity is particularly evident in West and South Auckland and on the basis of past market behaviour, he doesn’t see activity slowing down until the Reserve Bank makes an announcement.
Following the QV results, Prime Minister John Key said the Reserve Bank should consider targeting investors with tough new lending rules, according to the NZ Herald, saying there was a responsibility for the Bank to "have a look at the question around investors".
Asked if he was keen for the Reserve Bank to consider extending LVRs above the 30% limit in Auckland, Key said, "my own view is [they] should make some movements in that area, yes".
"They haven't given me any signals at all ... it's a double-edged sword - you need investors in the market to make sure there are rental properties," Key said.
"But my sense is potentially one of the risks is you have got people buying rental properties at the moment, borrowing more money but fearful that the Reserve Bank is going to move.
If they are going to make changes, probably they should just get on with it."
Following the QV figures showing house values rising by 5.6% nationwide in the last three months, Century 21 New Zealand
national manager, Geoff Barnett
predicts country towns and districts close to the more expensive centres becoming the next hot property.
“My money’s now on the small towns and districts surrounding our main centres being the next to enjoy some good price growth,” said Barnett.
“We’ve had the halo effect around Auckland. The next thing will be the halo effect around our other main centres.
“Plenty of people are taking advantage of the low interest rates while they last with more and more trading in their central convenience for a bit more time in the car. However, no longer is that mainly an Auckland phenomenon. Expect to see more commuters living outside our other main centres and travelling back and forth every day,” said Barnett.