New Zealand posts fastest house price growth since mid-2017

Wellington

NEW Zealand house prices rose last year at the fastest pace since mid-2017 amid record-low interest rates and a surge in demand for investment property.

Prices rose 11.1 per cent in December from a year earlier, showed CoreLogic New Zealand data released on Tuesday in Wellington.

House price inflation accelerated from 9.2 per cent in November and was the fastest since May 2017.

Prime Minister Jacinda Ardern has expressed concern about the inability of new buyers to enter the property market.

She is considering tax policy changes to help damp demand for property, while also exploring ways to increase construction.

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The central bank last month rebuffed government suggestions that it add house prices to its monetary policy remit.

The bank said that could lead to below-target employment and inflation.

"The long-term affordability of the property market is reliant on significantly increasing supply, which is a slow-moving factor," CoreLogic's head of research Nick Goodall said in a statement.

"All indications are that the fervent growth in property values will continue throughout the summer at least," he added.

Falling returns from bank deposits have encouraged a resurgence in investor demand for houses, adding to demand from New Zealand residents returning from Covid-afflicted economies.

The Reserve Bank has said it will reinstate restrictions on low-deposit lending to both investors and owner-occupiers beginning on March 1.

House prices rose 2.6 per cent from November and 6.1 per cent in the final quarter of 2020 - the fastest quarterly pace since early 2004, the CoreLogic report showed. BLOOMBERG