PHOTO: Photo: RNZ / Nate McKinnon
House prices grew at a record rate for the second month in a row.
Property research firm Core Logic’s house price index rose 2.6 percent in December, with the average house price hitting $788,967.
The rise eclipses November’s record, when prices grew at their fastest level in 16 years.
The index was up more than 11.1 percent on a year ago.
Core Logic head of research Nick Goodall said it was being driven by low interest rates, attractive capital gains and tight supply, which were unlikely to ease in the near term.
“It is clear that New Zealanders are looking towards property as a safe investment and the most attractive asset for wealth accumulation.”
He said consistent messages from both the government and the Reserve Bank to protect that wealth had reduced the risk associated with property investment, which led to greater demand and higher values.
“Later in 2021 the potential flow on impact of such strong growth will eventually be outright unaffordability reducing the pool of buyers able to borrow enough to participate in the market.”
Photo: RNZ / Vinay Ranchhod
Goodall expected this would result in greater political pressure on the government to curb demand.
Loan-to-value ratios will be reinstated by the Reserve Bank (RBNZ) in March but their ability to take the heat out of the market will be limited, Goodall said.
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