Average Auckland home passes $1.2 million, QV says
Monday, 8 February 2021
The average house in the Auckland was worth just over $1.2 million at the end of January, data from Quotable Value shows.
Rampant price inflation continued on homes across the whole country in January, with the average value increasing by 5.16 per cent nationally over the past three-month period, said QV general manager David Nagel.
The average New Zealand home was worth $815,898, a leap of 12.96 per cent up from the same time last year.
Affordable housing campaigner Hugh Pavletich from Christchurch called the cost of houses a national disgrace, especially for young couples and families trying to set themselves up in a home.
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“This is about right and wrong,” Pavletich said. “This is a severe breach of human rights. That should be crystal clear to anybody holding public office.”
Price inflation caused a political storm last year, with criticism aimed at the Reserve Bank, which cut interest rates aggressively in a bid to support the economy, and keep people in work, but which helped fuel house price rises.
QV data showed some parts of Auckland had seen enormous price inflation with the average price in the North Shore suburbs having risen by 6.15 per cent in three months to the end of January, resulting in an average of $1.38m.
Only the more distant parts of Auckland – Franklin ($774,789), Papakura ($817,699), and Waitakere ($961,841) – currently had average residential property values below $1m, QV data indicated.
In the Auckland central-fringe leafy suburbs the average price was now just over $1.4m, QV said.
It wasn’t only in Auckland where prices continue to rise rapidly, Nagel said.
“The major urban centres continue to show strong gains in value over the past three months, with Tauranga and Palmerston North leading the way with 10.46 per cent and 9.19 per cent growth respectively,” Nagel said.
“The larger centres were generally first to show the rapid value growth and this was primarily driven by both first-home buyers and investors competing for the very limited supply of entry-level housing stock,” he said.
“But the market strength has now spread to the higher value locations in the major centres as confidence returns in the post-lockdown economic recovery,” he said.
House prices have become a major political issue, with New Zealand housing costs the highest in the entire OECD club of rich nations for lower-income families, and commentators ponder when prices will hit their limit.
“The rapid and sustained residential value growth has compounded affordability problems, making it difficult for first-home buyers to put together a deposit in the bigger cities,” Nagel said.
Pavletich said housing in New Zealand was already severely unaffordable, and 2021 was likely to be crunch time for the market.
“When Ireland’s housing market crashed in 2007, the house price to income ratio was about 4.7 across the metro areas. In New Zealand it is now hitting the 8.0 mark, although some markets are more unaffordable than others, with Auckland at 8.6 for example,” he said.
Nagel did not expect a price crash, but he did expect a “cooling” of the market as more first home buyers get past the point they can scrape together a deposit, and investors find it hard to get bank funding.
“With the return of LVR speed limits in March this year, we may see a gradual cooling of the market in the second half of 2021, particularly in the entry-level locations as property investors reach their credit limits and first-home buyers struggle to raise a deposit,” Nagel said.
“But with the long-term forecast for housing demand in New Zealand looking positive, it is difficult to see the market take a significant turn for the worse any time soon,” he said.