National property prices continued their surge in March, with astonishing figures showing housing affordability worsening.
The latest data from the CoreLogic House Price Index (HPI) reveals New Zealand's annual growth rate hit 16.1 percent - the highest rate of growth since January 2006.
"According to the HPI, which is the most complete and robust measure of property value change in the market, nationwide values increased by a further 2.2 percent in March, which takes the annual growth rate to 16.1 percent," CoreLogic says in a statement.
"This prolonged period of value increases provides a compelling backdrop to the Government's recent housing announcement, which has been met first with shock and then with a mix of relief (for would-be first home buyers), concern (from renters) and criticism (from property investors)."
Main centres see prices rise
Auckland saw average property values rise by another 1.7 percent in March - part of 12-month increase of 14.4 percent - pushing the level above $1.2m for the first time.
In Hamilton the pace of monthly changes in average property values cooled a little to to 2.3 percent in March.
"However, that was still a strong figure - and in fact the annual growth rate accelerated to 17.0 percent, equating to a rise in values over the past year of roughly $106,000," CoreLogic said.
Tauranga's small dip in average values in February (-1.5 percent) was fully reversed in March (+2.5 percent), with the level now just short of $898,000. That is 16.2 percent higher than a year ago.
Wellington's property values spiked higher yet again in March, seeing 3.1 percent in Lower Hutt, 3.4 percent in Wellington City, 3.5 percent in Porirua, and 5.4 percent in Upper Hutt.
"As with many other parts of the country, however, there is now clearer evidence that these rampant gains are seeing more would-be first home buyers drop out of the market, either by choice or because prices have exceeded their borrowing capacity," CoreLogic warns.
Christchurch hit 1.9 percent in March, pushing up the annual growth rate to 11.9 percent. Values in the city have now topped $575,000, up by more than $61,000 from a year ago.
Dunedin's average property values rose by 1.6 percent in March, bringing the rise over the past year to 15.4 percent, or $82,965,
Impact of Government's housing package
Last week the Government announced a trifecta of new housing policies, aiming to cool-off property investment and help first-home buyers.
The most controversial has been the proposal to remove the ability for property investors to deduct their interest expense from their tax returns, which some have claimed will result in investors withdrawing from the market.
"Despite the market being tipped further in the balance of first home buyers we're not expecting a significant exodus or pull-back from investors," CoreLogic states.
"The long-term appeal of property investment remains - using debt to access a valuable asset and having 'someone else help pay off your mortgage' in a bid to provide passive income and wealth in retirement.
"Longer term, the appeal is likely to shift towards new builds. If this is the case, it should provide a variety of benefits, including increased investment demand for newly built homes as well as a boost to housing supply, which remains scarce."