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Dunedin's house values are up by more than 20% on last year, which is more than double the increase in any other main centre, according to new figures.
Quotable Value’s [QV] House Price Index data for January has Dunedin’s houses up 8.4% from just three months ago.
Clutha had the biggest growth of the country’s provincial centres, up 25.3% on last year and 10.9% up from three months ago.
QV senior consultant Tim Gibson said there had been significant interest in all levels of the market in Dunedin, especially for two-bedroom units ‘‘as people look to downsize’’.
“We have seen some significant growth at the top end of the market with higher demand for $1.5 million-plus properties, driven by regional confidence and low interest rates,” QV senior consultant Tim Gibson said.
Real Estate Institute figures back that up. According to its Million Dollar Price Report, sales of houses in Otago worth more than $1 million rose 14.3% to 528.
Mr Gibson said local and out-of-town investors were entering the market, as were more young investors.
And they were taking risks to snatch up houses on offer.
“To increase the likelihood of their offer being accepted, potential purchasers are now placing emphasis on non-conditional offers, completing due diligence following acceptance.”
At a jump of 20.8% on last year, Dunedin is well ahead of the next main centre, Wellington, which had an increase of 9%.
Mr Gibson said long-term projects such as the new Dunedin hospital were driving demand.
But the rises in values painted a bleak picture for those trying to get into a house.
In January, the 16th annual Demographia International Housing Affordability Survey rated all New Zealand markets ‘‘severely unaffordable’’.
It found Dunedin people were being evicted from their rentals and struggling to keep a roof over their head.
Dunedin’s housing market had become more unaffordable than Wellington’s, it said.
Survey co-author Hugh Pavletich said there was no doubt affordability was getting worse.
‘‘This survey is a huge wake-up call, basically, for all involved at central and local government.
‘‘The whole situation has moved from a crisis to a disaster.’’
Nationally, house values were up 4.4% to an average of $714,747.
The Queenstown-Lakes region had the smallest increase of all QV’s 16 designated main centres, up just 0.1%.
There were a number of reasons listings were down and fewer people were selling, QV general manager David Nagel said.
‘‘People are aware that prices are high and I guess maybe they don’t want to go through the mental stress of having to find another property if they sell their own.
‘‘Investors are sitting on their properties because there’s rules around flipping properties and having to pay tax on that.’’— Additional reporting from RNZ