New Zealand residential property values rose at the fastest pace in five months in February, driven by strong demand in Auckland.
National property values rose 6.4 percent over the past year, ahead of the 5.7 percent pace in January and matching September's gain, according to state-owned valuer Quotable Value. Auckland, the country's biggest city, led the index higher, with property values rising an annual 13 percent, ahead of the 12 percent pace the previous month and the biggest annual gain in nine months.
Reserve Bank governor Graeme Wheeler told a parliamentary committee last month that Auckland has a shortfall of between 15,000 and 20,000 properties required to meet population growth, and the 7,500 annual consents for new building permits is lagging behind the 10,000 it needs to address the shortage. The central bank is concerned that an overheated property market could cause a house price bubble and lead to financial instability.
"The seemingly insatiable demand for Auckland property has resulted in the upward trend steepening" in the latest figures, said QV spokesperson Andrea Rush. "Values in Hamilton, Tauranga, Wellington, Christchurch and Dunedin are all showing moderate increases but nothing compared to the pace of Auckland values which continue to surge ahead."
More homes have come onto the market during February, helping ease a listing shortage, and sales and mortgage approvals are also ahead of January, she said.
Reserve Bank restrictions on high-debt mortgage lending have spurred demand for new homes, where the lending rules don't apply, QV said.
"The new build market across the country is in high demand, particularly amongst first home buyers," Rush said.
Prices for new developments such as Addison, Stonefields and Flatbush in Auckland have increased as much as 10 percent over three months for each new stage release, the state valuer said.
Meanwhile, property values in Wellington rose at a 0.9 percent annual pace, Christchurch city values increased 3.4 percent, Hamilton advanced 3 percent, Dunedin rose 1.2 percent and Tauranga advanced 4.8 percent.