House prices hit their highest rate of annual growth in 15 years in the year to March and CoreLogic says that justifies the Government’s move to rebalance the market.

CoreLogic’s latest house price index showed nationwide values rose by another 2.2 per cent in March, which left the national average value at $845,491.

It also took the annual growth rate to 16.1 per cent, which was the highest rate since January 2006. The quarterly growth rate also kept up the pace, with an increase of 7.2 per cent.

Wellington had the highest rate of both quarterly and annual value growth.


Wellington had the highest rate of both quarterly and annual value growth.

CoreLogic head of research Nick Goodall said those exceptional value growth rates illustrated the strength of the market and provided evidence for why the Government felt it had to act.

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“It wasn’t really a surprise that the Government weighed in with something bolder than anyone expected. Recent market data meant there was always going to be further invention.

“The surprise was in the controversial way that they have done it. But we believe the policy changes might not have as much impact as has been said by some.”


Property investors have been vocal in their opposition to new housing policy announced by the government, and say rent hikes are an inevitable consequence.

Low mortgage interest rates and the phased introduction of the interest deductibility removal should lessen the immediate impact to investors and limit any major sell-off, he said.

Investors’ ability to pass on additional costs to their tenants was also limited by the fact that rent increases were anchored to tenants’ incomes, he said.

“But investor demand for existing property will be impacted and the ability for highly leveraged investors to both extend their portfolio and hold a high debt position has also decreased.”

This could lead to a split market where demand for new builds, which were largely exempt from the policy changes, would grow while demand for existing property dropped off, Goodall said.

The Government’s policy changes might not have as much impact as some think, CoreLogic's Nick Goodall says.


The Government’s policy changes might not have as much impact as some think, CoreLogic’s Nick Goodall says.

“If demand does shift, it should provide a variety of benefits, including increased investment demand for newly built homes as well as a boost to housing supply which remains scarce.

“But a key constraint on new construction remains in the form of the industry being at or near capacity, both for materials and labour, as the current timber shortage is clearly illustrating, and our closed borders are exacerbating.”

Despite the changes, he did not expect a significant exodus or pull back from investors as the long-term appeal of property investment to provide passive income and wealth in retirement remained.

Judith Collins says Jacinda Ardern has broken a promise by introducing a ‘capital gains tax’ after the Government announced a series of housing policy changes.

“The Prime Minister’s commitment to protecting the value of housing assets should provide confidence to current owners and future buyers.”

CoreLogic’s price index showed the value growth was consistent around the country with the main centres all recording double-digit annual growth and provincial centres performing solidly too.

Of the main centres, Wellington saw the highest rate of both quarterly (8.6 per cent) and annual growth (19.9 per cent) which left the region’s average value at $935,575 in March.

Two periods of lockdown in late February and then in March had no impact on Auckland’s growth.

Quarterly growth of 6.7 per cent and annual growth of 14.4 per cent meant the region’s average value topped $1.2 million for the first time at $1,219,183.

Tauranga, which had a dip in values in February, was back on form, reversing the decline and turning in quarterly growth of 2.4 per cent and annual growth of 16.2 per cent. This left its average value at $897,586.

The provincial centres’ data revealed further strength around the country, although Gisborne turned in a 2.4 per cent monthly drop in average value.

Goodall said this was a surprise as Gisborne had previously been a standout area due to prolonged strong growth.

“Market fatigue may now be setting in, with the average value of $531,180 stretching affordability in our eastern most city. But one month of data does not make a trend and Gisborne’s annual value growth is sitting at 21.4 per cent.”

Even Queenstown’s market, which has been hardest hit by Covid’s economic fallout, had an annual value increase of 5 per cent that left its average value at $1,271,532.