PHOTO: Residential houses are seen in Wellington, New Zealand

WELLINGTON (Reuters) – Desperation among homebuyers is pushing New Zealand house prices to record highs, overpowering the government’s efforts to rein in the red-hot market and putting in jeopardy a key policy promise by Prime Minister Jacinda Ardern.

Nearly 15,000 homes sold for more than NZ$1 million ($705,100) during the last 12 months, compared with just 5,500 in 2020, according to the Real Estate Institute of New Zealand’s (REINZ) Million Dollar Price Report.

In the capital, Wellington, a 50-year-old derelict house deemed “too dangerous to enter” sold for almost NZ$1 million – a price far higher than expected.

“The new owners didn’t step foot inside before purchasing it… even we could not enter,” said Ben Atwill of real estate group Ray White, which made the sale. “From what I am seeing, there is no stopping the premium dollars from coming through.”

Such runaway home prices have made New Zealand’s property market one of the most unaffordable in the world, and measures introduced by the government and the central bank have so far done little to cool demand.

This is largely because of pandemic-inspired policies that have translated into cheaper mortgages, allowing affluent buyers and investors to upsize their homes and build up portfolios of rental investment properties, while locking out low and mid-income earners https://www.reuters.com/world/the-great-reboot/how-new-zealands-much-admired-covid-19-response-helped-fuel-housing-crisis-2021-04-16.

The government has tried to rein in the market with policy tweaks by applying new taxes for property investors and putting checks on “flipping” activity, in which investors buy a house, quickly renovate it and sell it for a large markup. Such investment has pushed house prices up by nearly 30% to a national average of NZ$820,000, on top of a 90% rise in the preceding decade.