There has been significant growth in New Zealand property prices over the last quarter, the strongest increase recorded by CoreLogic QV since 2016.
The December House Price Index from CoreLogic QV shows in the last three months of 2019, the rate of quarterly growth for national prices was 2.7 percent - the highest since November 2016 (3.9 percent). That takes the national average property price to $710,129.
The quarter was significantly assisted by growth in December, with property values jumping 0.9 percent on the last month while the annual rate of growth jumped to 4 percent. As CoreLogic QV points out, that is the strongest annual growth rate since September 2017 (5 percent).
All 16 major cities tracked by QV saw quarterly growth. Recovering property values in Auckland are helping out with a 1.9 percent quarterly jump - the highest since November 2016. However, New Zealand's biggest city was down 0.1 percent annually in December. The average value for a property there is now $1,047,110.
Dunedin has seen a massive surge in prices over the last year, with an 18.3 percent annual growth rate taking its average value to $514,680. Similarly to last month, Dunedin has a higher average price than Christchurch, which rose 2.3 percent annually to $507,852. Wellington had the second-largest jump of the main centres with a 8.6 percent annual rise to $746,955.
Looking to the regions, both CoreLogic's Nick Goodall and QV's David Nagel agree provincial centres are continuing to see high rates of growth.
However, Goodall says eventually affordability will impact the buyer pool and local economies may not be able to sustain the significant growth.
"While we've seen a resurgence in property values in our larger centres, we are starting to see a slowdown in some provincial cities as recent rates of growth can't be sustained with consistent demand," he said.
Regions with some of the best quarterly growth include Rotorua (5 percent), Hastings (5.4 percent) and Invercargill (6.4 percent).
"The end of 2019 saw a couple of high-profile releases (bank capital requirements and LVR rules) from the Reserve Bank and ultimately they took a conservative stance with each of them," said Goodall.
"The resurgence in property value growth in the second half of the year, in conjunction with a lift in investor activity and lending, was enough to see the RBNZ take a 'wait and see' approach to making any changes which could accelerate further growth (and reduce financial stability).
"With this most recent data now available it appears that was a wise decision."
Goodall said there was a "demand/supply imbalance". While there is low unemployment, low-interest rates, and a solid economy giving Kiwis more options, the number of houses available is also low.
Nagel said looking forward to 2020, there will likely be a "continuation of modest but steady value growth", at least until new stock comes onto the market.
"The property market hates uncertainty and with a general election looming later this year and no clear outcome on the horizon, housing policy will be key as we head towards the final quarter of 2020."