New Zealand housing prices hit new high on limited supply
Values 8pc above 2007 peak thanks to markets in Auckland and Christchurch, despite curbs
New Zealand house prices hit a record high last month, as strong growth in the nation's two main cities offset a flat showing elsewhere.
Government property valuer Quotable Value's residential property index rose 8.5 per cent in the year to August 30, compared with a 8.1 per cent annual rate in July.
The index is now 8.3 per cent above the market's previous peak in late 2007.
Prices in the biggest city Auckland and earthquake-damaged Christchurch were growing ahead of the rest of the country, with lack of supply still a major influence.
Auckland prices rose 13.1 per cent in the 12 months to August, and prices in Christchurch were up 11.4 per cent, because of limited supply.
The Reserve Bank of New Zealand has imposed limits on the amount of low deposit-high value house loans (LVR) by banks from the start of October in a bid to slow the growth in prices.
"They will definitely limit the number of first-home buyers and investors who will usually require loans of more than 80 per cent of the property's value," QV research director Jonno Ingerson said.
But he said in the two main cities where lack of supply was the driving factor the effect may be more limited.
"So while the LVR limits may have some dampening effect on values, we should still expect them to increase for some time yet," Ingerson said.
But the central bank expects inflation pressure to pick up and it is widely believed that it will raise interest rates in early 2014, a move that could act to further rein in prices.