Entry level prices surge ahead of subsidies

It will be interesting to see if price growth continues over the autumn and winter months at the same rate it has over summer and spring..This year we've witnessed a sharp rise in home values in the outer suburbs as competition for Auckland's more affordable homes has driven values up in the $500,000 to $1.5 million range.

In fact, the QV stats for April show the average value for a home in Auckland is now $809,200.

Many entry-level homes in average suburbs far from the city centre are also selling for well over $700,000.

This may mean changes to the government's KiwiSaver first-home deposit subsidy scheme, HomeStart, which may not be enough to keep up with the rising first home values. Under the scheme Auckland eligible house price limits will rise from $485,000 to $550,000.

But as we can see, recent sales show entry-level home values are rising much faster than the government caps.

A recent sale of a basic 120sq m 1960s weatherboard home on a 675sq m site at Woodstock Rd in Forrest Hill sold at mortgagee auction for $1 million -- as bidders sought to secure the home in the prized Westlake College zone. The CV was 760,000.

Average-sized homes in nearby Hillcrest and Sunnynook are also selling for well over $1 million, while a three-bedroom in Glenfield sold recently in the $900,000s.

Figures from QV.co.nz show Forrest Hill home values rose 9 per cent over the past three months and the average value there is now $907,750; Hillcrest values rose 12 per cent to an average of $801,000: and average values in Glenfield rose 6 per cent to $676,900.

Multiple bidders also competed at a recent auction for a 120sq m three-bedroom one-bathroom home at 39 Halsey Drive, Lynfield which sold for $900,000; it had a CV of $690,000. The average value in Lynfield is $798,500 and values there rose 14 per cent in the past three months.

The sales results of TV show My First Home also show the rise in value of entry-level homes over the past three months. The three contestants did well, having each spent $100,000 plus labour to renovate their home.

The Schreuders bought their 72sq m do-up at 245 Scenic Drive for $480,000 in December and sold it for $721,000. The Wardlaws bought their home at 194 Te Atatu Rd, Te Atatu South for $594,000 in November and sold it for $898,000. The Gourleys' paid $526,000 for 238a Rosebank Rd, Avondale, and sold for $721,000.

That rise in value of these homes can be partly attributed in part to the renovations and the extra publicity the sales got from the TV show, but also to the rise in values between November and April.

QV.co.nz E-Valuer figures show Titirangi values increased 9 per cent in the past three months and the suburb's average is now $725,900; Avondale values rose 8 per cent over the same period to an average of $643,600; Te Atatu South values also rose 9 per cent over the past three months to an average $596,000.

It will be interesting to see if price growth continues over the autumn and winter months at the same rate it has over summer and spring. At this stage there are no indications it's likely to slow down, apart from the usual annual seasonal downturn.