Values up but market changing

New Zealand’s residential property values are rising faster than they have since 2007, QV data shows – but questions are being asked about to what extent the looming tax and LVR changes are affecting the market.

Thursday, October 1st 2015, 1:51PM

by Miriam Bell

Nationwide values recorded a 12.6% year-on-year increase in September, according to the latest QV House Price Index.

This is the fastest rate of increase since October 2007 and leaves the average value nationwide at $542,277.

Over the past three months, values went up by 4.2% and they are now 30.9% above the 2007 market peak.

Once adjusted for inflation, the annual increase drops slightly to 12.3%, which leaves values at 11.8% above the 2007 peak.

Auckland’s heated housing market, which saw the fastest annual rate of increase in values since 1994, continues to be a key driver of activity.

QV’s data shows the SuperCity’s values jumped by 22.6% year-on-year, leaving the average Auckland value at $896,676.

Over the past three months, values increased by 6.7% and they are now 64.1% higher than in 2007.

Adjusted for inflation, the annual increase comes in at 22.3%, which means values are 40.1% above the 2007 peak.

However, Auckland’s ever-higher values along with the much-heralded tax and LVR restrictions seem to have been driving buyers to look elsewhere – which, in turn, impacts on values elsewhere.

Values in central and upper North Island centres, including Tauranga, Hamilton, the Waikato, Hawkes Bay, and Whangarei, continue to follow an upward trend.

Hamilton values were up by 14.9% year-on-year and by 9% over the past three months, which leaves the city’s average value at $416,290.

Tauranga values increased by 11.2% year-on-year and by 3.5% over the past three months, which means the city now has an average value of $502,771.

QV spokesperson Andrea Rush said nationwide sales volumes have been tracking at between 36% and 43% higher over the past three months, as compared to the same period last year.

Buyer classification data shows this increase is attributable to multiple property owners who own less than 10 properties purchasing more properties and more sales to first home buyers.

Rush said some of these sales can be attributed to Aucklanders relocating out of the city or investing outside of Auckland.

“The high number of sales over the winter period could also be a result of buyers wanting to get in before the government and reserve banks changes around lending and tax rules, most of which come into effect today.”

Valuers from around the country reported ongoing, strong demand from Aucklanders interested in the greater affordability and better yields on rental properties available in other markets.

Of the major centres, only Wellington and Christchurch were not seeing much value impact from growing demand outside of Auckland.

Rush said both markets have been relatively flat over the past three months.

Meanwhile, Auckland itself might still be turning in record value increases, but buyer demand could be slowing.

It seems that a higher percentage of properties at auctions have been passing and being sold by negotiation after the auctions, while more properties are being sold with an asking price up front.

QV’s Northern operations manager Jan O’Donoghue said there seems to be less hype, less panic and more caution.

“There has been some sort of realisation among buyers that the prices are not affordable and there is time for them to do more homework before putting an offer in.”

Within the Auckland region, the biggest value increases were in the more affordable areas in the south of the city.

Manukau region values were up by 9.0% over the past three months and by 25.0% year on year, and, in the Papakura District, values were up by 11.4% over the past three months and by 29.8% year on year.

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Auckland price rebound may be temporary »

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