House-price increases average 13pc

House prices continue to soar, particularly in the provinces, according to figures released yesterday.

Residential property values rose 13.5 per cent in the year to the end of May, the Crown's property information firm, Quotable Value, has found.

The Quotable Value survey measures property value growth by comparing the sales price of a property with its capital value.

Of the main centres, Dunedin posted the biggest annual growth, with prices rising 22.9 per cent.

Second was in Hamilton, up 21.2 per cent, followed by Christchurch on 18.5 per cent. Single-digit rises were posted in Auckland (5.8 per cent) and Wellington (8.2).

Provincial cities recorded stronger growth, with property values up 33.4 per cent in New Plymouth, 29 in Gisborne, 21.3 in Hastings, and 18.1 in Palmerston North.

QV spokesman Blue Hancock said that, although provincial centres were initially slow to follow the property cycle, they had recently been outpacing the main cities.

He expected growth to slow over winter, which tended to be a quieter time for the property market. "However the current range of competitive fixed-term interest rates may keep the market active for a while yet."

Reserve Bank Governor Alan Bollard kept the official cash rate at 6.75 per cent last Thursday, but did not rule out future rate rises.

Later that day, Kiwibank cut its two-year fixed interest mortgage rate from 7.5 to 7.35 per cent, and National Bank cut its two-year rate from 7.8 to 7.65 per cent.

Real Estate Institute president Howard Morley said the figures were in line with April data released by the institute.

"With high levels of employment, the real estate market is quite firm. Interest rates aren't moving.

"The figures show that all round, it has been performing pretty well."

Mr Morley said real estate agents were reporting they were still short of listings and there were a lot of buyers in the marketplace.

People had been waiting four years for the market to drop off, he said, but it was "very steady".

- additional reporting: NZPA