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Real estate prices in Central Otago Lakes are soaring, with the median house price up 42% in the past year to $659,500 in October, according to the Real Estate Institute of New Zealand.
It was the country's biggest gain as New Zealand's median house price increased 11% for the month, while tougher lending rules failed to dampen sales of higher value properties.
The national median house price rose to $510,000 in October from $460,000 a year earlier, the institute said. The price weakened from the September median level of $515,000. There were 6727 national sales in October, down 14% from a year earlier and 9% lower than September.
Concern about New Zealand's bubbling housing market has prompted policymakers at the Reserve Bank to introduce tighter restrictions for highly-leveraged lending. Monday's report shows stricter conditions around loan-to-value ratio lending is having a bigger impact on lower-priced properties, with sales of homes under $400,000 accounting for just 35% of sales in October, from 41% a year ago, while sales of properties over $1 million accounting for 15% of the total, up from 10%.
"Our data suggests that the impact of the revised LVR rules is having more of an effect on lower-priced sales compared to higher-priced sales, with a surge in the percentage of sales over $1 million and a noticeable decline in the number of sales below $400,000 compared to 12 months ago," institute spokesman Bryan Thomson said.
"Some of this change may be reflective of the overall uplift in prices over the past year as the market for higher-priced properties is continuing as normal, but the market for lower-priced properties is becoming more difficult for both buyers and sellers."
Mr Thomson said the normal ''spring bounce'' in listing numbers had so far been "quite weak" this year.
"One possible reason for this is that the revised rules could be making it harder for people to know whether to sell, as they wonder if there are buyers about, so they hold their properties back from the market," he said.
"This could have the result that we're seeing, which is that supply falls but the demand is still there, so prices keep rising."
Prices hit a record in Auckland, up 16% to $868,000 from the year earlier. Other regions to hit records were Northland, up 11% to $399,000; Waikato/Bay of Plenty, up 21% to $460,750; and Southland up 13% to $225,000.
The number of properties available for sale nationwide shrank by 24% compared with October last year. Wellington has the fewest properties for sale with an estimated six weeks of supply.