Property values up 5.7% last year, Auckland set to keep gaining

New Zealand property values rose 5.7 percent last year, driven by gains in Auckland and a recovery in Christchurch, and the housing market in the country's biggest city is set to keep climbing, Quotable Value says.

Values were 1.5 percent in the three months ended December 31 from the same period a year earlier, rounding out the annual gain to 5.7 percent, state-owned QV said today. That is 2 percent above the previous market peak in late 2007.

"The increase in national values was predominantly driven by Auckland and to a lesser extent Christchurch," research director Jonno Ingerson says.

"These were also the only two areas to have consistently increased while the rest of the country varied throughout the year."

New Zealand's property market regained some vigour in 2012 after several years of being in the dumps, with an increasing Auckland population swelling demand against a backdrop of a limited supply.

The lack of supply has become a concern for politicians, who are looking at ways to stoke new building.

Mr Ingerson says the lack of properties on the market was "one of the defining features of 2012", with buyers struggling to find something suitable.

Those supply issues will likely push up Auckland values further this year, with the city expected to see more migrants arriving than people leaving.

Auckland values are 11.1 percent above the last peak and now exceed those in 2007, even when adjusted for inflation.

Wellington property values are expected to stay flat this year after having suffered in recent years from restructuring and job losses in the public sector, while in Christchurch they are predicted to keep growing as demand outstrips supply.

Values in the country's provincial centres increased at a slower pace than the national average and are expected to stay flat this year.

(BusinessDesk)

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14 Comments & Questions

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Cheap loans will always fuel a boom, even when real incomes aren't rising to support it. The trouble is deferred until interest rates rise - probably 12 months. Watch for all the mortgagee sales then, sadly.

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Property bubble on the horison, followed by interest rate rises to subdue it which will hold NZ in recession for several more years. Doom and gloom.

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What happening in Auckland is the shortage of housing supply in the market while the city attracts the positive net inflow of migrants both domestically and internally.

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Jim has got it in a nutshell. It's simply a case of supply and demand. It's really only happening in central Auckland, where some areas have shown growth of around 20% since the 2007 boom. If the government wants to change this it needs to create jobs in areas that have an over-supply of housing, like Whangarei.

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Auckland is the welfare centre of NZ, and the city of welfarees preferred residence. This is where their support structure is, thus there is going to be a shortage of houses until the welfare lifestyle is eliminated and people go to/ are sent to/ live in areas that have work available.
This morning's Herald has an comment of West Coast employers begging for capable employees. Housing is cheap, too, and generally of good quality

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How can a person on welfare afford to buy houses of 500k upwards? High-growth suburbs of 20% are made up of professionals who are thoroughly scrutinised by the banks.

Auckland is overwhelmingly the runaway success story of New Zealand. A large, diverse population attracts wealthy immigrants who fuel more jobs, which attracts migrants from the rest of New Zealand, who fuel higher house prices. Even with the new houses and apartments being built we will still be short of accommodation over the next 20 to 30 years, fuelling even higher prices.

Definitely expect cycles of boom and bust, though. I'd say two years and we will be on a downwards cycle.

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Jim has it wrong. What is happening in Auckland is being exacerbated by the cheap mortgage loans. They are allowing people to drive the prices up to a crazy level, unsupported by income growth. This is sustainable until interest rates go up and then a large number of over-leveraged people will lose their shirts.

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The latest foreign buy-up of Auckland housing is not being driven up by "low interest rates" on mortgages.
It has nothing to do with the job shortages/people on social welfare, either.

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Good to see someone who can argue without basing it on a single fact.

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Yet both of those statements are facts.

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In your opinion.

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A land agent told me that 80% of purchasing is by Chinese buyers. Another land agent says thanks to NZTE Shanghai for referrals of Chinese buyers. Presumably, many are non-resident. Anecdotal evidence is that many houses are kept as an investment and for family long term. Sometimes they are occupied part-time by a family member, -eg, here for education.
A building industry supplier told me that 95% of new houses are built by Asian buyers. Is this enough evidence that the market is being pushed up by foreign money without the help of mortgages.
Added to that is the scarcity of sections at reasonable prices and with a reasonable size. Long Bay in North Shore, Auckland, has many new sections, most of which are under 500sq m.

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You know your 80% figure of only Chinese buying and building new houses needs to be substantiated by credible sources otherwise you'll sound like another racist anti-Auckland nutjob.

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We got into our first house and it was under 420K. We have done a bit of interior painting and insulation ourselves over the past 12 months. We got a new registered valuation from the bank last month and it came out to 525K. Now we have taken out our original 20% down payment and used it on our second house, settling in two weeks. At this rate we'll reach our target in five years. Thank you to the Auckland real estate market for providing us with a superb opportunity.

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