Values rising around NZ

April's QV House Price Index has just been released and there are no signs that New Zealand’s house market is slowing down.

Nationwide values increased by 2.1% over the past three months and by 12.0% year-on-year. This left them 37.1% above the 2007 market peak.

Once adjusted for inflation, national values were up 11.6% year-on-year and are 16.9% higher than in 2007.

This means the national average value hit $568,058 in April, as compared to $559,492 in March.

While the data shows Auckland values reversed the recent downward trend in values, it was Hamilton and Tauranga values which turned in the star performances in April.

Hamilton’s values increased by 5.2% over the past three months and 25.3% year-on-year, leaving the average value at $471,072.

Tauranga’s values were up 3.6% over the past three months and 21.5% year-on-year, which left the city’s average value at $577,494.

In contrast, Auckland’s values went up by 1.5% over the past three months and by 16.5% year-on-year. This left them 72.5% above the 2007 market peak.

Once adjusted for inflation, Auckland’s values were up 16.0% year-on-year and are 47.1% higher than in 2007.

The region’s average value is now $942,760, as compared to $931,061 in March.

QV national spokesperson Andrea Rush said values in all parts of the Auckland region are increasing again.

However, they are rising at a slower rate than other upper North Island centres, like Hamilton, Tauranga and Rotorua, and districts in surrounding areas.

She said that all the main centres around New Zealand and many regional centres saw home values increase during April.

For example, Wellington’s values were up 2.9% over the past three months and 8.4% year-on-year, leaving the average value at $496,812.

Values in Dunedin and Christchurch also continued to rise, albeit at a slightly slower pace, while Queenstown values’ have started to accelerate in the past three months (up 6.6%), Rush said.

“Much of this growth appears to be driven by the promise of record low interest rates continuing and increased activity from those looking outside of the main centres for either more affordable homes or higher yields for rental property.”

Meanwhile, the renewed activity in the Auckland market prompted a warning from QV for investors.

QV’s Auckland valuer James Wilson said properties which offer potential for intensification under the Proposed Auckland Unitary Plan are increasingly popular.

“However, purchasers need to ensure that they fully understand the requirements of the PAUP and not just focus solely on density regulations.”

Wilson said that, generally, Auckland investors should carry out more comprehensive sensitivity analysis to ensure long terms returns on properties are sustainable if variables like interest rates change.

“We are still seeing investors basing purchase decisions solely on the chance of capital gains.”