NZ house prices gain average 1.4 percent in June quarter

By NZPA

Thursday 15th August 2002

The price of the average New Zealand house rose by 1.4 percent in the June quarter, taking the annual price rise to 6.7 percent, according to early figures from Quotable Value.

However, once final sales figures were collated for the three months to June that was likely to rise further, possibly to 2-1/2 percent, ASB Securities chief economist Anthony Byett said today.

Housing supply had become relatively tight, and was likely to mean further house prices increases, Mr Byett said.

"Price increases are unlikely to match the mid-90s surge (nor those of higher inflation periods previously), but an average national gain of around 1-2 percent per quarter is likely for the next few quarters ..."

That would boost the average gain for the year to between 7 percent and 9 percent, he said.

Factors driving the housing market remained the same, including population growth through immigration, rising house prices internationally, rising local incomes, and relatively low interest rates.

The Reserve Bank of New Zealand left the benchmark interest rate unchanged at 5.75 percent on Wednesday, and banks' variable lending rates range from Kiwibank's 6.95 percent to 8.00 percent.

In Auckland, the area average house price rise gained 1.8 percent in the June quarter, compared with a 3.7 percent rise in the March quarter. That was expected to contribute to an annual price increase of between 10 percent and 15 percent.

A growing population appeared to remain a major driving force in the housing market. The largest average gain was on the North Shore (up 2.3 percent).

In Hamilton, house prices rose by 1.7 percent in the quarter, compared with 2.1 percent in March, following several years of falling average prices.

Tauranga house prices rose 0.8 percent in the June quarter (3.4 percent in March), with beachfront property prices expected to rise sharply in future.

In Wellington, house prices were up 1.6 percent in the June quarter (1.3 percent in March). Upper Hutt prices rose further, by 2.9 percent for the quarter and 7.2 percent on the June 2001 quarter.

Nelson city house prices were up 3.1 percent (5.8 percent in March), to lead the national charge, Mr Byett said. Strong population growth and investment from non-residents were the main drivers.

House prices in Christchurch did not change in June, following a 0.9 percent rise in March. Prices fell 0.4 percent in Dunedin in June, reversing a 1.3 percent rise in March, although demand remained strong.

Further south, Invercargill house prices gained 0.7 percent in June (6.0 percent in March), although lower dairy incomes were likely to impact on the region in the next 12 months.

"However, some housing is still available below building cost, student numbers are good and returns are high, suggesting some upside at the lower end," Mr Byett said.

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