AUCKLAND (CU)_Over the past year, house prices in New Zealand have seen a sharp escalation, with ultra-low interest rates and various government schemes pushing prices to record highs. This was particularly evident in the case of larger housing units, as people who were forced to work from home during the pandemic began to demand for bigger houses with extra space. However, what was not expected was an increase house prices at the lower end of the market, particularly during winter, when some heat comes out of the market usually.
According to recent figures published by Quotable Value, in the three months to the end of August, prices of the cheapest houses, which are often favoured by first home buyers, increase by an average of 3.6 per cent in the Trans-Tasman nation, the fastest rate in five years. This is also greater than the combined rates during this period over the last two years.
New Zealand’s largest valuation and property services company also revealed that prices of homes at the lower end of the market also increased by 2.1 per cent over the same period in 2020, and remains 0.3 per cent higher than the national average of 3.3 per cent. In terms of specific cities and regions, the biggest increase in the sector of the market was reported from Rotorua, where the average entry level price grew by 6.9 per cent to $458,679. Meanwhile, in Nelson this figure increased by 6.5 per cent to $535,032, and a 6.4 per cent surge was recorded in New Plymouth, as the average price of cheaper homes reached $441,011.
In its report, Quotable Value also reported the conditions of the lower end market in the Auckland region, where the average price was up 2.9 per cent to $710,607. During these three months, the cheapest house prices in Wellington rose by 4.5 per cent to an average of $683,909, while in Christchurch’s, this figure increased by 3.6 per cent to $404,048.
According to experts at the company, winter is usually a time when the market begins to cool off to a certain extent, and although it appears that the runaway residential property market, which was unleashed amid the pandemic last year, is taking longer to slow down, it will happen in due course.
“House price rises will have to stop eventually, especially since interest rates are almost certainly going to rise soon, but unfortunately it’s not getting any easier for first-home buyers in the meantime,” Quotable Value’s general manager David Nagel said.