By Tina Morrison
July 5 (BusinessDesk) - New Zealand residential property values increased at the fastest pace in 12 years in June, driven by strong demand.
The average value of a New Zealand home rose 13.5 percent to $590,909 in June from a year earlier, ahead of May's 12.4 percent annual gain, and marking the fastest pace since 2004, according to state-owned valuer Quotable Value.
New Zealand's housing market is being bolstered by record migration as more people compete for a limited supply of housing, while record low interest rates stoke investor demand. Hamilton led the latest gains, with annual values soaring 29 percent to $492,403, while Tauranga values increased 24 percent to $599,915, and Manukau City values jumped 20 percent to $842,142. In the Auckland market, where the Reserve Bank has tightened lending rules to curb house price inflation, values increased 16 percent to an average $975,087, ahead of May's 15.4 percent pace.
"Many housing markets around the country are continuing to be driven by strong investor demand, low interest rates, rapid price growth in the Auckland market and strong net migration," QV spokesperson Andrea Rush said in a statement.
Some 46 percent of Auckland home sales were to investors, up from 37 percent in 2012, QV said, citing CoreLogic data.
QV said the prospect of further Reserve Bank restrictions later this year to curb investor activity in the housing market seems to have prompted a surge in investor activity as buyers acquire as many properties as possible under current rules before any further restrictions are introduced.
"It appears this may have led to a surge in investor purchases in various housing market around the country over the past month," Rush said.
Auckland land with development potential under the Proposed Auckland Unitary Plan was commanding a higher premium in the market, QV said.
Rush said she hopes the plan will provide for much needed new housing supply and infrastructure for the growing Super City region to alleviate upward pressure on property values.
In other main centres, Wellington city values advanced 14 percent to $625,319, Christchurch gained 3.6 percent to $491,148 and Dunedin increased 11 percent to $327,664. Among other large gains, values in the Queenstown Lakes District soared 25 percent to $899,335, while Waikato values jumped 26 percent to $385,618.