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Strong house price gains to continue in 2017, says QV

Wednesday 1st February 2017

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New Zealand residential property values continued to rise in January, with strong growth in regional towns close to main centres like Auckland, Wellington and Queenstown, with property set to keep attracting foreign buyers.

The average value of a New Zealand home rose 13.5 percent to $631,302 in January versus the same month a year earlier, data from state-owned valuer Quotable Value showed.

Record migration and low interest rates have bolstered the country's housing market, prompting the central bank to tighten up lending rules to reduce the risk to the nation's financial stability. New restrictions on lending to property investors with high loan-to-value ratios came into play on Oct. 1 last year.

"It’s possible rising mortgage interest rates and the new LVR rules will continue to constrain the rate of value growth during 2017," said QV’s national spokeswoman Andrea Rush. "However, this will be balanced by continued record high net migration and a lack of housing supply particularly in Auckland. As well as the fact New Zealand property can be bought freehold and has fewer taxes on property compared with many other countries, meaning it remains a highly attractive investment to foreign buyers."

Growth in Auckland house values increased at a 12.8 percent annual pace in January, and 0.2 percent on a quarterly basis, taking the average value for the Auckland region to $1.05 million. While the rate of growth is slowing, values are still 91.7 percent higher than the previous peak of 2007.

Wellington regional house values increased 20.6 percent year on year to $582,322. Some 30 percent of all sales in the capital are to first home buyers, and the local market is likely to remain strong in the year ahead with rising net migration into the city and a shortage of listings, QV valuer David Cornford said. Rents, which have gained about 10 percent in the last year, are also likely to rise in the capital with a shortage of rental stock, Cornford said.

In other urban centres, Christchurch rose 2.8 percent to $494,539, Dunedin gained 15.5 percent to 359,055, and Hamilton values rose 18.6 percent on the year to $531,337.

Rush said QV had seen strong value growth in centres within two and three hours' drive of main centres where prices have gained recently. Kaipara District, north of Auckland, has seen values jump 25.9 percent in the past year, while Hauraki District house values have risen 30.3 percent in the past year. People priced out of the Wellington market have bought on the Kapiti Coast, Horowhenua and the South Wairarapa, and the South Island's Mackenzie District has seen a 26.9 percent gain driven by buyers priced out of Queenstown and Wanaka.

Tauranga values rose 20.7 percent to $672,752 and Nelson values gained 16.4 percent to $508,343. The only place where house prices declined in the year was Buller, on the West Coast of the South Island.

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