Property up moderately in Dunedin

Three property reports were released yesterday, just before Easter, a traditionally busy weekend for property sales in parts of Otago. Business editor DeneMackenzie reviews the reports and their implications.

Home values in Dunedin as a whole increased slightly in March from a year ago, up 0.6% year-on-year but 1.8% higher than they were at the peak of 2007.

In the third property report to come out yesterday, QV figures showed Dunedin Central and North values rose by 0.8% over the past three months while other places across the city had slight falls in value over the same period.

Taieri values fell 0.3%, Dunedin South values were down 1.3% and peninsula and coastal values fell 1.4% since January.

QV valuer Duncan Jack said the Dunedin market was experiencing good activity levels with both listings and inquiries.

''There is reasonably good demand for most residential properties across all the value ranges.''

Most properties were selling quickly due to the demand and multiple offers were becomingly increasingly common, he said.

Despite demand, there was nothing more than moderate increases in value. Data indicated value levels were flat during the past few months and growth was only slightly positive during the past year, in most suburbs.

Queenstown Lakes district values continued on the upward trend seen for some months, rising 3.3% in the three months ended March and 7.2% in the year ended March. The average value there was now $715,787, the highest average value of any area outside Auckland, Mr Jack said.

QV national spokeswoman Andrea Rush said the Government's new HomeStart policy might lead to increased activity among first-home buyers around the country.

''It remains to be seen whether this has an impact on values. The Reserve Bank is considering tighter rules on borrowing to property investors which it has said may now be defined as those who own more than one property.''

That could cover any property the owner did not live in, she said.

Close to 40% of all residential house sales in New Zealand were now to those who owned two or more properties and the Reserve Bank's changes could come into effect as early as July 1 this year, Ms Rush said.

Green Party co-leader Russell Norman said the HomeStart package, which started yesterday, would probably be absorbed into higher margins for developers.

Quoting the Reserve Bank, Dr Norman said the central bank advised the Government last year its package of HomeStart reforms could result in increased developers' profit margins.

Over the longer term, the package had the potential to add to house price pressures in what was a highly overvalued market.

''National's HomeStart package helped National win the election but is actually a poisoned chalice for young home buyers, as new access to subsidies will be offset by even higher house prices.''

The Treasury and the Reserve Bank warned the Government of the fatal design flaws of its Home-Start package but National went ahead with the policy in an attempt to be seen as doing something to address the housing crisis, he said.

If the pipeline supplying new houses was not fixed, giving people more money to buy houses would push up the price they had to pay, Dr Norman said.

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