Prices rise fast at top end of housing market

House prices are still increasing, but it is no longer pressure from investors and first-home buyers driving them, a property researcher says.

New figures from Quotable Value (QV) show the average national value rose 6.9 per cent to $1,029,820 in the three months to the end of November, and was up 28.4 per cent, year-on-year.

The pace of quarterly increase was faster in November than October’s 5.3 per cent.

In the Auckland region the average value reached $1.48m, up 8.3 per cent over the three-month period and by 27.9 per cent annually.

The Wellington region’s average value rose 4.2 per cent to $1.08m in the months to November, while Christchurch city’s average value was up 12.7 per cent to an average of $762,949.

But QV general manager David Nagel said price pressure had shifted from the cheaper properties popular with investors and first-home buyers to higher valued stock.

Twelve of the 16 areas monitored recorded higher rates of value increases, he said. ‘‘But it was a result of pressure at the top end of the market, which has a different type of buyer, with less credit restrictions or affordability constraints.’’

Nagel said in almost all cases the biggest price increases were occurring in the top 25 per cent of properties, and the difference was often significant. ‘‘Take Palmerston North, which has experienced massive price growth this year. It is now down to just 2.7 per cent three-monthly growth overall, but the top 25 per cent of properties are showing 6.3 per cent value growth.’’

Another example of this change was Dunedin, which was one of the hottest markets earlier in the year, he said. The city’s values were up by 4.3 per cent to an average of $714,488 over the past three months, but the top 25 per cent of properties showed value increases of 9.6 per cent over the same time.

This finding echoed real estate agency Barfoot & Thompson’s latest figures, which showed an increase in sales of higher-priced properties pushed Auckland house prices up in November.

With values rising at the top end of the market, none of the 16 areas monitored had a decline in average value. All but Palmerston North, Napier, Nelson and Invercargill recorded a faster quarterly increase than in October.

Christchurch and Queenstown Lakes District, where values were up 11.7 per cent to an average of $1.59m, had the strongest value gains.

On an annual basis, Canterbury had the biggest increases in value at 36.2 per cent, followed by the Hawke’s Bay region at 33.9 per cent, while the Taranaki and Manawatu-Whanganui districts were up 33.2 per cent.

Nagel said while the November numbers looked bullish there were signs that the property cycle was starting to transition.

Agents were reporting an upswing in listings, while open home attendance rates were falling, and some properties were being passed in at auctions, unheard of a few months ago, he said.

‘‘This isn’t a surprise given rising interest rates, changes to the loan-tovalue ratios last month and a further tightening of credit rules from December.’’