Investors remain undeterred

Barfoot & Thompson says Takapuna was the North Shore's hottest suburb last year with its median price reaching $1.355 million - a 37 per cent increase on the 2015 median price. Photo / Supplied

House sales are down more than 20 per cent from their April peak according to seasonally adjusted data from Westpac.

In addition, the bank's economists say that, at a national level, the rate of price growth has slowed considerably over the past few months, as I have pointed out in previous columns.

The economists say the rate of price growth in hotspots such as Auckland, Hamilton and Tauranga has slowed since July, while the majority of regions have seen an acceleration in house price growth, with most hitting double-digit annual gains.

Clearly the LVR measures, forcing investors to pay a 40 per cent deposit, aren't deterring them from the regions ... could a 50 per cent LVR be on the cards?

The bank's economists say: "While LVRs look to have taken some heat out of the market, past lending restrictions have had only a temporary impact on prices."

They forecast a gain of 7 per cent in property prices this year, compared to an estimated 15 per cent last year. A growing population means an outright decline in prices is a slim prospect.

The bank estimates the shortfall of houses is more than 35,000, with Auckland bearing the brunt. Last week the Labour Party claimed the country was short of 60,000 homes, while the National Party said the figure was no more than 20,000.

Westpac says the housing shortage will get worse before it gets better and that consumer spending will slow, meaning Reserve Bank Governor Graeme Wheeler - who has almost single-handedly put home ownership out of reach for most young people - can sit on his hands until he leaves the building in November.

In my often-repeated opinion, Wheeler was wrong to increase rates in 2014 to 3.5 per cent just as we emerged from the GFC, and silly to lower them in 2015 and last year to 1.75 per cent. In 2008 the OCR was 8.25 per cent.

Top 20
The North Shore dominates a list of 20 suburbs that have seen the highest median price gains during 2016.

Taking out top spot is Mission Bay where its median sale price went up 53 per cent ($620,000) $1.787 million.

Six North Shore suburbs feature in the list; Takapuna, Belmont, Castor Bay, Rothesay Bay, Albany and Browns Bay.

According to realtor Barfoot & Thompson, which compiled the Top 20, Takapuna was the North Shore's hottest suburb in 2016 with its median sale price up 37 per cent ($365,000) to $1.355 million.

Orakei dropped out of the top 20 from 2015's top spot to 108 with its median value slipping 2.38 per cent ($50,000) to $2.051 million.

Barfoot & Thompson's managing director Peter Thompson says people are leaving central city locations for a change in lifestyle. Twelve areas in the top 20 are coastal.