New Zealand house prices have now increased for 11 consecutive quarters, provisional figures for the quarter ending March 2004 released by Quotable Value (QV) today reveal.

The overall NZ QV House Price Index (QV HPI) shows an increase of 22% for the year ending March 2004. This annual growth compares favourably with the substantial growth of nearly 24% for the year ended December 2003, says Blue Hancock of QV Valuations.

Only Upper Hutt City and Papakura’s House Price Index increased more than last quarter. All other areas showed a slower rate of increase, indicating some moderation is returning to the market, said Mr. Hancock. The national median sale price for the quarter was $225,000. “The House Price Index is a better indicator of change in property values, as median sales prices can be impacted by sales activity in specific property types”, Mr. Hancock said.

Areas to achieve annual growth rates in excess of 20% for the year ended March 2004 include Invercargill 34.9%, Napier 31%, Christchurch 30.7%, Dunedin 29.6%, Tauranga 27.9%, Nelson 26.5%, and Waitakere 23.1%.

Although Auckland City shows an annual growth of 19%, this figure is not final, as unfortunately not all sales have been received for Auckland City for the March 2004 quarter.

“The highest quarterly growth of 6.1% was recorded in Papakura, which indicates a ‘ripple effect’ in Auckland’s house price growth,” Mr Hancock said. “The ‘ripple effect’ is the impact of strong house price growth reaching the outer suburbs of a city as many investors and first home buyers compete to purchase the cheaper properties available in those locations compared to other parts of the city.”

This is also demonstrated by the higher value quarterly growth in Porirua (4.1%) and Lower Hutt City (3.5%), when compared with Wellington City (2.6%).

The next quarter is expected to still show increases in house values but with the rate of increase beginning to reduce, Mr Hancock said.

“Important factors like the continued downward trend in net migration, and decreasing affordability due to high house price-to-income ratios could continue to reduce buyer demand in the short term.”