QV warns average Auckland house price could hit $1 million mark in just over a year
Auckland's housing market is heating up again, prompting fresh warnings of a crisis of affordability.
To buy the "average" house in the super city, you will now have to part ways with $955,793 - an increase of 3.3 per cent over the past three months, and 15.4 per cent year-on-year.
The increase, which comes despite restrictions designed to curb mortgage lending, prompted a warning from QV that the current rate of increase would see the average price hit $1 million by June 2017.
QV national spokeswoman Andrea Rush said if values continued to increase at 15 per cent per year, the average house price in Auckland would be "well and truly over a million" in 12 months' time.
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The cooling off of the Auckland housing market, between October and February, was shortlived, Rush said.
"Migration is continuing at the highest levels seen in 100 years and this population growth coupled with growing demand from investors, means housing supply, particularly in Auckland and Queenstown, is not able to keep up with demand and this is driving values ever higher," she said.
"While it is clear Auckland needs more housing, both within the existing urban metropolitan boundary and on 'future urban' zoned land, as well as new infrastructure to service it, it appears to be investor demand that's driving the rapid value growth in Auckland and other parts of the country."
Labour housing spokesman Phil Twyford described the continued price rises in Auckland as "a disaster for future generations", saying it was a result of speculators and land bankers having a "field day".
"That's a tragedy, that's nothing to be proud of, and what it means is that homeownership rates are going to continue to plummet, and a generation of young Kiwis will be locked out of home ownership."
Housing Minister Nick Smith said there was "nothing good" about the possibility of an average $1m house price.
He would not predict whether Auckland houses would hit a $1m average by the end of 2016, but said the Government was working on a range of initiatives to tackle rising prices.
"There is no single magic bullet around the housing issue, these issues go back decades...we need to do a whole lot of things."
Asked about the possibility of Auckland house prices hitting a $1m average, Prime Minister John Key said there would "always be a range of different houses" but the Government was doing its best to deal with rising prices.
"I don't think any one particular thing from a national policy statement or bright line test of itself will, you know, be the sort of silver bullet if you like, but I think overall a combination of them will."
House values in Auckland are now 74.9 per cent higher than the previous peak of 2007, but when adjusted for inflation that figure drops to 49.1 per cent.
Earlier, Realestate.co.nz said the number of new listing in Auckland was down 9.2 per cent on a year ago, with the average asking price now just under $880,000. Asking prices do not necessarily reflect the eventual sales price, as the QV figures show.
Nationwide, QV said the average house price sits at $577,829 - up 12.4 per cent over the past year.
Rush said house prices continued to "accelerate" in many other parts of the country, with most of the activity driven by strong demand from investors.
"Tauranga, Hamilton, Wellington, Dunedin and Queenstown values continue to see particularly strong very growth, as do many other regional centres and smaller towns located within commuting distance of these main centres.
"The Christchurch market by comparison is slow and steady with normal levels of activity and sales volumes but little value growth as supply is now meeting demand for housing in the city."
Home values across Auckland have begun accelerating again.
It appears that new measures aimed at curbing investor activity in the market, has not made much of a dent in demand from investors.
Waitakere City had the biggest increase - up 4.6 per cent.
Home values there are now 16.5 per cent higher than the same time last year, with the average house value now $765,019.
Home values rose 3 per cent in the former Auckland City council central suburbs over the past three months and 13 per cent year-on-year. The average value there is now $1.12m.
North Shore City increased 3.2 per cent over the past three months and 14.1 per cent over the past year.
The average value there is now $1.11m.
Manukau City was up 4.4 per cent over the past three months and 19.6 per cent year on year, with the average house value now $824,407.
Meanwhile, Papakura district value has slowed a little with values up 1.1 per cent over the past three months but 20.7 per cent year-on-year.
QV Auckland registered valuer James Wilson said: "Throughout May we have seen a continuation of the buoyant market conditions experienced during April and values are rising rapidly across the city again."
"Agents are reporting a shortage of listings, with well-presented good quality stock moving increasingly quickly, in some cases offers are made and accepted without the property reaching the wider market," he said.
"We are also seeing numerous examples of properties transacting within short timeframes by property speculators."
Vacant sections within new developments were "extremely popular", with the on-selling of vacant sites, which had been purchased off-plans, providing strong capital gains, he said.
"Purchasers of such sites who intend to design and build their own homes must ensure that they obtain and understand all covenants which may govern the design and construction specifications."
There was also an on-going concern about the lack of awareness by homeowners following changes to home replacement insurance, Wilson said.
"We believe a growing number of homes are underinsured."
House prices in the capital rose 4 per cent over the past three months - up 10.2 per cent year-on-year.
Values are now 10.8 per cent higher than in the previous peak of 2007. The average value across the wider region is now $504,794.
Home values in Wellington City suburbs continue to show strong growth rising 4.4 per cent over the past three months and 11.9 per cent over the past year. The average value there is now $610,102.
Lower Hutt rose 3.9 per cent, with an average price of $406,188, while Upper Hutt values rose 3.2 per cent over the same period, and Porirua house values increasing by 2.8 per cent.
QV Wellington registered valuer Kerry Buckeridge said: "For the first time since prior to the previous peak of 2007, there has been no winter slow-down in the Wellington housing market."
"Residential property values continue to rise across the region, as strong buyer demand continues to outstrip the low supply of listings for sale on the market."
Yet residential property listings in Wellington city were half what they were a year ago, Buckeridge said.
"[This] is leaving thin pickings for buyers and increasing competition for those homes on the market.
"Given the rapid rise in home values over the past few months, it's becoming more difficult for vendors to price homes for sale, and thus sales by deadline sale or tender are becoming increasingly popular," he said.
Home values in Christchurch City increased just 1.1 per cent over the past three months and 3.3 per cent year-on-year, with the average value in the city now $490,137.
QV Christchurch registered valuer Damian Kennedy said the Christchurch market was ticking along with steady levels of market activity and modest growth.
"Well presented homes in traditionally popular areas continue to be in high demand but properties with maintenance issues are tending to sit around for longer on the market.
"Buyers are tending to wait and see, to find their perfect property, rather than buying and 'making do' or improving the properties themselves."
Across the greater Christchurch area, in Waimakariri, Selwyn and Christchurch City districts, prices within subdivisions on the outskirts were reducing "a little", Kennedy said.
"Valuers are noticing an increase in earthquake damage on properties they are inspecting, so we recommend people check their properties for earthquake damage from the Valentine's Day and February 29 quake this year."