No stopping value rises: QV

Reports of waning interest in the Auckland market – due to sky-high prices and increased investor restrictions – may be premature with the latest QV data showing ongoing price rises in the SuperCity.

Tuesday, August 2nd 2016, 1:21PM

by Miriam Bell

Auckland’s average residential property value increased by 5.2% over the past three months and by 16.0% year-on- year to hit $992,207.

This is 81.6% above the 2007 market peak – although, once adjusted for inflation, the average Auckland value went up by 15.5% year-on- year, which left it 54.2% higher than in 2007.

QV’s Auckland valuer James Wilson said a severe shortage of listings and the resulting strengthened demand had characterised the city’s market throughout July.

It was still too early for evidence of the market impact of the Reserve Bank’s further strengthening of LVR restrictions in July, he said.

“But some investors have said they are entering a ‘wait and see’ holding pattern.

“Given the LVR strengthening, and Reserve Bank rhetoric regarding the potential of debt-to- income ratios, we would urge investors to conduct adequate analysis of the long term investment returns that any potential property can achieve.”

He said properties in the Super City southern boundary fringe districts of Papakura and Franklin are popular with investors because they offer stronger returns than other parts of Auckland.

A growing fear of missing out was rife across the Auckland market and this was leading to risky buying behaviour, such as failure to complete adequate due diligence, Wilson warned.

It is not just Auckland’s market that continues to grow solidly.

The average national value increased by 6.1% over the past three months and by 14.1% year-on- year to hit $602,434.

This is 45.4% above the 2007 market peak – although, once adjusted for inflation, the average national value went up by 13.7% year-on- year, which left it 23.5% higher than in 2007.

QV national spokesperson Andrea Rush said values continue to rise rapidly in many parts of New Zealand buoyed by low interest rates, strong investor activity and high net migration.

“Hamilton, Queenstown Lakes and Tauranga have seen some of the highest growth with Hamilton values rising 31.5% since July 2015, nearly twice as fast as Auckland which rose 16.0% over the same period.”

The Wellington and Dunedin markets also continue to show strong growth, she said.

“Christchurch is showing much more moderate value growth. Due to supply meeting demand for homes in the city, there’s now an over-supply of rental properties which is resulting in a downward trend in rents there.”

Rush also said it was too soon to tell what impact the Reserve Bank’s new LVR restrictions for investors might have on the market.

“However, there are reports the new rules have already led to some offers being withdrawn by investors in parts of the country.”

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Slowdown in Auckland market – B&T »

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