Skyrocketing Auckland prices leave those in other centres in their wake

The latest QV Residential Price Movement Index shows that residential property values nationwide increased by 6.8% in March, leaving values 3.7% above the 2007 peak.

This means the average value of a New Zealand residential property is now $502,411.

However, the growth is being driven by Auckland’s skyrocketing prices, with other markets around the country moving at a somewhat different pace.

QV national spokesperson Andrea Rush says the rate of growth of Auckland is exceptionally strong, while values in other centres are rising more slowly than they were this time last year.

“Value increases are beginning to plateau in parts of the Christchurch market as the supply of new homes begins to meet the demand created by the earthquakes.

“Values in Tauranga and Invercargill rose moderately, while the Hamilton, Wellington and Dunedin markets are quite flat.”

Auckland values are expected to continue to accelerate, while the rest of the main centres will remain steady with values increasing moderately, staying flat or even declining slightly.

But Rush says the Government’s new Homestart policy [which comes into effect 1 April] may lead to increased activity from first home buyers around the country.

“It will remain to be seen whether this has an impact on values.”

Meanwhile, the growth in the Supercity’s prices means that the average value of an Auckland residential property is now $796,649.

QV’s Auckland valuer James Wilson says that Auckland buyers continue to be wary of being priced out of the market by further increases. This means they are willing to pay premiums to secure properties.

He says that investors are very active as they capitalise on low interest rates and high equity across their portfolios.

“There is strong demand for home and income properties which provide multiple units of income, increasing returns for investors or aiding owner occupiers with mortgage repayments.

“The construction of minor household units is also becoming increasingly popular as people look to capitalise on strong demand for rental properties.”

Wilson adds that demand for new builds remains high, fuelled by LVR exemption for new construction.

Auckland’s price increases also mean that some buyers are looking away from the Supercity to more affordable options.

Rush notes that QV valuers in Hamilton and Tauranga say they are seeing a lot of Aucklanders coming down to purchase property in those centres due to the more affordable prices on offer.