House prices hit fresh highs but signs of new policy impacts

Prices paid for homes in April hit fresh record highs, with the average Auckland house ending the month worth just over $1.3 million, data from QV shows.

The valuation company’s data comes a month after the Government announced measures to dampen the rampant growth of the property market, saying the move was necessary as New Zealand now had the least-affordable houses in the whole of the OECD (Organisation for Economic Cooperation and Development).

QV general manager David Nagel said the market hit a new high in April, with the average house in New Zealand worth $913,000 at the end of the month, compared with $884,447 a month earlier. But there were signs the Government’s policy changes were beginning to have an impact, Nagel said.

‘‘We are hearing a range of anecdotal evidence of investors disappearing from auction rooms and even a decrease in first-home buyer presence,’’ Nagel said.

‘‘While fewer properties may be selling under the hammer, the majority are still being sold at prices that are at least as strong as before the tax announcements were made at the end of March.’’

The average value increased 8.9 per cent nationally over the three-month period to the end of April, he said.

That was a bigger leap than the 7.8 per cent price jump in the three months to the end of March.

Nagel said QV’s data indicated the average house price in New Zealand was $913,209 at the end of April, up by 21.4 per cent at the end of April compared with the same time last year.

The average annual household after-tax disposable income was $85,853 at the end of June, according to Statistics NZ.

The $1.3m record high for the average Auckland house masked some suburbs that had broken through the $1.5m mark for average prices, QV’s data showed.

Auckland’s central leafy suburbs hit an average price of just over $1.5m, more than 17 times the average after-tax income of the average New Zealand household.

The average house price on Auckland’s North Shore fell just short of that at $1.48m.

Houses in the far-flung west of Auckland burst through the $1m mark for the first time, with the average Waitā kere house valued at $1.05m at the end of April.

The average house in Tauranga and the Wellington district was just short of $1m.

Nagel said some regions were

showing ‘‘more conservative’’ monthly growth, even though that meant increases of more than 2 per cent in the space of one month.

‘‘The Hawke’s Bay region, Manawatu¯ -Whanganui and also the greater Wellington region are all showing very strong monthon-month value growth, with Hawke’s Bay leading the pack at 4.9 per cent monthly growth,’’ he said.

‘‘The two southern regions of Otago and Southland are showing much more conservative monthly growth of 2.1 per cent and 2.5 per cent respectively.’’

Nagel said QV could only guess at how the Government’s tax changes, which included progressively withdrawing taxbreaks for landlords, would impact house prices.

‘‘There is certainly an expectation that we will see at least a slowdown in the rate of value growth, with potentially fewer investors and maybe a few more first-home buyers entering the market over the coming months,’’ he said.

The Government has sent a clear message that it wants landlords to no longer be the price-drivers in the housing market.

In March, Finance Minister Grant Robertson said the changes were about tilting the balance of the property market away from investors and that removing interest deduction loopholes for investors would dampen speculative demand.

‘‘The New Zealand housing market has become the least affordable in the OECD,’’ Robertson said.

‘‘Taking action is in everyone’s interests, as continuing to allow unsustainable house price growth could lead to a negative hit to the whole economy.’’

Auckland houses were worth an average of $1.3 million at the end of April, QV figures show.