Rural and lifestyle property prices and sales up in New Zealand
The value of rural and lifestyle properties in New Zealand sold in the last three months are up 20% compared to a year ago, according to the latest market report from Barfoot & Thompson.
Lifestyle and rural properties sold in Northland and Greater Auckland are experiencing similar gains in price and sales numbers to those being achieved within Auckland City.
‘The value of lifestyle and rural properties we have sold in the past three months are up 20 percent compared to those for the same period last year, while the number of properties sold is up 10%,’ said Wendy Alexander, chief executive officer of Barfoot & Thompson.
‘In the past six months we have sold 179 rural and lifestyle properties, with the monthly average of properties sold being $24.4 million. This is the highest average price in a six month period for the past four years,’ she added.
In Northland the focus has been on dairy and dry stock farms, with the price an hectare for dairy farms being around $19,000 and that for dry stock farms $10,000.
The price per hectare for medium hill country farms more suited to sheep and beef ranges from $5000 to $9000.
Closer to Auckland the emphasis is on smaller holdings and lifestyle blocks, with the interest in Kumeu, Helensville, Coatesville and Clevedon being much stronger than in the recent past.
‘Banks are showing the same interest in lending to the rural market as they are to the residential market, and with interest rates being at historical lows, activity is high,’ added Alexander.
Meanwhile, it is being suggested that the Reserve Bank may follow through on a suggestion it may limit banks' loan to valuation ratios (LVRs) on home loans in an effort to cool down an overheating housing market next year.
Westpac chief economist Dominick Stephens believes that the first Reserve Bank is set to increase the Official Cash Rate (OCR) from its record low of 2.5% to July next year from March next year and the consequence of lower interest rates for a longer period of time will be more buoyancy in the housing market.
The speculation comes after Real Estate Institute of New Zealand figures showed that the national median house prices rose to a record high in June of NZ$372,000, up NZ2,000 since the previous record in March this year.
‘New Zealand could start looking a lot like Canada and Norway, where housing markets are frothy but the central banks are keeping interest rates low due to subdued consumer price inflation and high exchange rates,’ said Stephens.
‘Canada recently resorted to unconventional tools to try to cool the housing market, including maximum amortisation periods for mortgages, loan to value limits on equity drawdowns, and requirements for borrowers to demonstrate that housing costs are no more than 39% of income. It is possible that New Zealand could invoke similar unconventional tightening measures to cool an overheating housing market next year,’ he added.
In May Reserve Bank Deputy Governor Grant Spencer said limiting banks' LVRs was an option that could be implemented. The recent resurgence of the Auckland housing market in particular has come with banks writing loans with LVRs over 80% and even above 90%.