REINZ figures: House prices defy new LVR rules to hit fresh records in March

Home buyers appear to shrugged off the arrival of new loan to value ratio (LVR) rules as house prices soared again in March.

Median house prices for residential property across New Zealand reached a record $826,300 in March this year.

This figure from the latest monthly REINZ report was up 24.3 per cent from $665,000 during the same month last year.

These figures are based on sales recorded before the Government's latest package of housing policy instruments came into effect.

Earlier this month the Government announced the removal of tax deductibility of interest on loans for residential property investment and extended the bright-line test to ten years.

However the first tranche of the LVR restrictions came back into effect on March 1, with investors requiring a 30 per cent deposit and owner-occupiers requiring a 20 per cent deposit.

"March's result is much higher than many commentators would have expected," REINZ acting CEO Wendy Alexander said.

"We would have expected sales volumes to slow a little as buyers took this [LVRs] into account, however, it might just be that we need a few more months for this to really start to take effect."

Looking ahead, she said that she expected prices to continue increasing this year.

"We would expect house prices to continue rising, but we hope this will be at a slower pace than we've seen over the last 6 to 12 months," Alexander said.

"Hopefully the re-implementation of the LVRs, changes in government policy and the move towards winter will slow the rate of growth down a little, but only time will tell what effect they will have."

Auckland's median house price increased by 18.5 per cent from $945,000 in March 2020 to $1,120,000 in March 2021 – a new record for the city.

At the top end of the market, the percentage of properties sold for $1 million or more increased from 20 per cent (1,485 properties) in March 2020 to 34.8 per cent (3,386 properties) in March 2021 – the highest percentage of million-dollar plus properties ever sold.

The news was not good for those looking for a home on the opposite end of the market.

The number of homes sold for less than $500,000 across New Zealand fell from 27.9 per cent of the market (2,065 properties) in March 2020 to 15.3 per cent of the market (1,489 properties) in March 2021 – the lowest percentage of properties sold in the sub-$500,000 bracket ever.

There was a massive demand for homes throughout the month of March.

The number of residential properties sold in March across New Zealand increased by 31.2 per cent when compared to the same time last year (from 7,408 to 9,721) – the highest for the month of March in 14 years and the highest annual percentage change in three months.

Median house prices for New Zealand excluding Auckland increased by 23.6% from $550,000 in March last year to $680,000, a new record high for the country.

Auckland's median house price increased by 18.5 per cent from $945,000 in March 2020 to $1,120,000 in March 2021 – a new record for Auckland.

Additionally, Auckland City, Manukau City, North Shore City, Papakura District and Rodney District all reached new record median highs.

In addition to Auckland, 11 other regions reached record median prices.