House prices continue to skyrocket in New Zealand, hitting a new high for the end of March, according to Quotable Value New Zealand (QV).
QV’s latest data revealed that the average value of homes jumped from 6.8% quarterly growth in February to 7.8% nationally over the past three months. The national average value is now at $884,447, an 18.2% increase year-on-year.
All the major urban centres recorded strong gains in value, with Napier and Hastings dominating the other cities with 15.2% and 10.6% value growth, respectively, over the past three months. House prices in Palmerston North also continue to rise quickly with 10.3% quarterly growth.
Meanwhile, Auckland’s average value now sits at $1,268,509, up 7.2% over the last quarter, with 16.1% annual growth, up from February’s year-on-year growth of 14.2%.
Of the 16 major urban areas, all except Queenstown reached double-digit annual growth. However, the Queenstown market recorded a 9.7% increase over the past 12 months despite forecasts that it would struggle after the COVID-19 pandemic hit.
Palmerston North also took the spotlight, with an annual value growth of 26.8%, followed by Hastings and Marlborough with 25.9% and 25%, respectively. The Wellington region performed best of the main centres with an annual growth rate of 24%.
QV general manager David Nagel said he is still uncertain if the government’s new housing package will impact the rising house prices.
“This is not going to be a quick fix, but certainly the changes will impact the buying and selling habits of some investors. But any fall in activity from investors will likely be backfilled by increased demand from first-home buyers in the short term, so it’s hard to see prices coming down in a hurry,” Nagel said.
“It certainly sounds like it’s been a tough year so far for investors, with new Healthy Homes legislation impacting compliance costs for landlords in February, followed by the return of LVRs in early March. The announcement to extend the bright-line test to 10 years, as well as phasing out interest deductibility, will certainly make residential investment less attractive in the future. However, the capital gains for seasoned investors have been quite exceptional for the past couple of years.”