New Zealand property values rose at a 7.6 percent annual pace last month as demand continued to outstrip supply in Auckland and Christchurch, state valuer Quotable Value says.
Property values stepped up the pace from last month when they increased at a 7.1 percent annual rate, also driven by demand in Auckland and Christchurch. Values increased 2.8 percent in the three months ended June 30, up from a 1.7 percent quarterly pace in May, the agency said.
"The strong increase in values is largely constrained to Auckland and Canterbury, with values across the rest of the country still largely subdued," QV operations manager Kerry Stewart says.
New Zealand's Reserve Bank is planning to use new macro-prudential tools to restrict the volume of low equity mortgages as pressure in the housing market poses a risk to financial stability.
Most economists expect the central bank will also raise the benchmark interest rate from a record low 2.5 percent next year in part to contain the housing market in Auckland, where a supply shortage has driven up prices, and Christchurch, embarked on a massive rebuild after the earthquakes.
Auckland property values were 12.6 percent ahead from a year earlier, while Christchurch values increased 10.4 percent and Wellington values gained 2.6 percent, the agency said. Hamilton property values edged up 3.9 percent from last year and Dunedin values rose 4 percent.
"There is little sign that values will slow in Auckland in the immediate future," Mr Stewart says. "The number of properties for sale is continuing to drop while demand remains strong. Christchurch is also suffering from a shortage of stock leading to upward pressure on prices."
House values are 6.2 percent above the previous market peak of late 2007, QV says.
House prices in New Zealand are 25 percent over-valued, the International Monetary Fund said in May. Prices rose 8.4 percent in the year ended June, based on the Real Estate Institute's stratified median housing price index, led by Auckland and Christchurch.
Provincial centres are seeing some gains, with previously slow or declining areas such as Gisborne and Whangarei now picking up, QV says. Values in Taupo, Bay of Plenty, Rotorua, Gore and Invercargill still decreased in value.