NZ house prices rose 1.9pc in Sept qtr

By NZPA

Friday 15th November 2002

House prices rose 1.9 percent in the September quarter and 8.5 percent in the September year, according to Quotable Value New Zealand figures.

Prices across main urban areas rose 2.1 percent in the quarter and 9.0 percent in the year with Auckland prices ahead 2.6 percent and 11.9 percent respectively.

Strong increases in average sales prices over the previous quarter were recorded in some other districts. Average sale prices for the quarter in the Waikato rose 9.8 percent, Western Bay of Plenty 5.8 percent, South Taranaki 12.5 percent, Masterton 11.9 percent, Southern Wairarapa 24.93 percent, Horowhenua 6.74 percent, Kapiti Coast 7.92 percent, Tasman 6.4 percent, Hurunui 37.6 percent and Central Otago 7.8 percent.

QVNZ said the overall total measure of prices had increased in all main urban centres for five consecutive quarters and sales volumes were significantly higher than the same quarter last year.

"The growth in the property market during the traditionally quiet winter months indicates a particularly strong start to the summer," said QVNZ's Nikolai Shipkov.

"It is expected there will be strong growth in both sales volumes and prices due to the high levels of interest in the property market."

ASB Bank chief economist Anthony Byett said the figures for the quarter were provisional and he expected the rise to be revised up to 2.0-2.5 percent.

Invercargil prices has a spectacular 17 percent gain for the year. Gains in Dunedin were a modest 4.4 percent while Christchurch prices only rose 3.9 percent -- not a great deal more than the rate of inflation. Wellington prices rose 6.2 percent in the year. There is still a very strong demand for rental properties in the main urban centres with the number of rental properties sold in the September quarter being 2327. Some 1356 flats were sold in the Auckland region and 368 in the Wellington region, Mr Shipkov said.

"This consistent demand from property investors continues as a result of strong rental demands, increasing rents and subsequently higher returns."

Mr Byett said that population and income growth together with low interest rates were the key drivers of higher prices.

House prices had been rising around the world and the New Zealand rises were quite modest compared with Britain (up 31 percent) and Australia (up 20 percent), he said.

"Seen from this international perspective and relative to the mid-1990s New Zealand's experience, the average nationwide price increase has been relatively moderate," Mr Byett said.

He said the high level of household debt was a key constraint. Lending growth, which had slowed, was on the rise again as were house sales.

"The upward price trend looks set to continue over the summer."

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