Surge in investor activity sees home values soar across NZ

Surge in investor activity sees home values soar across NZ

The latest monthly QV House Price Index shows that nationwide residential property values for June have increased 13.5% over the past year. Values rose by 5.6% over the past three months and are now 42.6% above the previous market peak of late 2007. When adjusted for inflation the nationwide annual increase drops slightly to 13.0% and values are now 21.6% above the 2007 peak. The average value nationwide is now $590,909.

The Auckland market has increased 16.1% year on year and 4.7% over the past three months. Values there are now 78.4% higher than the previous peak of 2007. When adjusted for inflation values rose 15.6% over the past year and are 52.1% above the 2007 peak. The average value in the Auckland region is now $975,087.

The full set of QV House Price Index statistics for all New Zealand for June can be downloaded by clicking this link: QV House Price Index (HPI) for June 2016.

QV National Spokesperson Andrea Rush said, “Nationwide values are now rising at the fastest rate since 2004, up 5.6% over the past three months alone and the nationwide average value is now nearing $600,000.”

“Many housings markets around the country are continuing to be driven by strong investor demand, low interest rates, rapid price growth in the Auckland market and strong net migration.”

“In terms of the main centres, the Hamilton market saw the highest growth, up 29.0% over the past year, and Auckland, Wellington and Dunedin markets are also seeing rapid value growth of between 4.0% and 5.0% over the past three months.”

“The Christchurch market has also seen a lift in sales volumes but values continue to rise at a slower rate than the other main centres.”

“Regional areas within commuting distance of the main centres also continue to see strong upward pressure on values with Queenstown Lakes District seeing the greatest increase with values rising 10.7% over the past three months and 25.0% year on year.”

“The latest CoreLogic Buyer Classification data shows the share of sales in Auckland to investors is now at 46.0% of all sales, up from 37.0% in 2012.”

“The Reserve Banks is considering introducing further restrictions on property investors and it appears this may have led to a surge in investor purchases in various housing market around the country over the past month.”

“With the Proposed Auckland Unitary Plan (PAUP) implementation recommendations due this month, it’s hoped this will provide for much needed new housing supply and infrastructure for the growing Super City region to alleviate upward pressure on property values.”

Auckland

Home values continue to rise across all parts of the Super City region with the former Manukau City suburbs seeing the strongest growth, up 20.4% since June 2015 and 5.3% over the past three months. The average value there is now $842,142.

The former Auckland City Council suburbs have increased by 14.3% over the past year and 4.9% over the past three months. The average value there is now $1,146,639. Waitakere City values rose on average by 15.0% since June 2015 and 4.3% over the past three months. The average value there is $771,270. Values in the former North Shore City suburbs also increased by 15.0% on average year on year and were up 5.4% over the past three months. The average value there is now $1,135,868.

Papakura District values have increased by 22.6% in the year to June 2016 and were up by 2.2% over the past three months. Rodney District values rose by 16.9% over the past year and 2.9% in the past three months. Franklin values rose 17.9% over the past on year and 3.7% over the past three months.

QV homevalue Registered Valuer, James Wilson said, “Throughout June we’ve seen a continuation of the buoyant market conditions in the Auckland housing market.”

“There’s still a shortage of listings and well-presented properties are moving increasingly quickly, in some cases offers are made and accepted without the property reaching the wider market and we continue to see high levels of speculation in the market.”

“Investors appear to be heeding the recent warning by the Reserve Bank that further policy measures may be introduced later this year to curb investor activity in the housing market.”

“This appears to have led to a surge in investor activity with many seeking to acquire as many properties as possible under the current rules before any further restrictions are introduced.”

“This is particularly evident within the more affordable areas of West and South Auckland.”

“Based on past market behaviour, we anticipate this surge in activity to continue until such time as any announcement or strengthening of LVR’s is released by the Reserve Bank.”

“With the Proposed Auckland Unitary Plan (PAUP) implementation date drawing ever closer, land with greater development potential under the proposed plan is commanding an increasingly higher premium on the market.”

“The apartment market is also growing in popularity and experiencing strong value growth, in particular new builds or those purchased off plans.”

“We strongly recommend completing adequate due diligence before signing a contract to purchase an apartment off the plans, not only into the value level of the property, but also into the background of the developer, paying particular attention to the quality of their past developments, financial stability and scale of the company.”

“Apartments complexes already under construction, with anticipated completion dates of within six to eight months are the most sought after.”

Hamilton and Tauranga

Home values across Hamilton City continue to show exceptionally strong growth rising a total of 29.0% since June 2015 and 6.9% over the past three months. The average value in the city is now $492,403. Values in the surrounding districts also continue to rise rapidly with Waikato District values up by 26.4% year on year and 4.7% over the past three months; Hauraki values were up by 18.6% on the same time last year and 7.5% over the past three months while the Waipa District rose 21.3% since June 2015 and 6.1% over the past three months.

QV homevalue Hamilton Valuer, Stephen Hare said, “The Hamilton market is still seeing strong demand with values being driven up as the supply of properties on the market is not able to keep up with demand.

“We are continuing to see high levels of activity and demand at the lower value end of the market in the price bracket of $400,000 to $600,000 from first home buyers and investors.”

“The higher value price bracket is now also seeing a surge in demand with more homes now selling in the $700,000 to $950,000 price bracket and we with the recent rapid value rises in the market we are now seeing more properties selling over the one million dollar mark.”

“The higher value sales are commonly seen throughout the suburbs of Flagstaff, Rototuna and Huntington, along the river and around the Lake.

“A growing trend is that we have been seeing first home buyers priced out of the Hamilton market buying in townships within commuting distance of the city as they search for homes they can afford to buy. These first home buyers are now also competing with investors looking for better yields. It’s likely this surge in activity will slow as prices in these towns catch up with Hamilton lower priced suburbs.”

“Waipa District towns within commuting distance to Hamilton continue to see strong buyer demand such as the district’s main centre, Cambridge, which is a 30 minute drive from the Hamilton CBD.

“There’s a growing trend of Aucklanders relocating to live Cambridge due to the more affordable housing it offers and local sources now say as many of 30.0% of all sales in the $600,000 plus range are being sold to this group.”

“Entry level properties in Cambridge currently sell for between $400,000 and $600,000 and the price to gain entry into the housing market in this quaint English-style country town is now rising rapidly.”

Home values in Tauranga City continue to rise rapidly up 23.65 year on year and 4.9% over the past three months. The average value in the city is now just shy of $600,000 at $599,915. Western Bay of Plenty home values also continue to rise rapidly, up by 20.9% since June last year and 5.8% over the past three months. The average value in the district is now $526,756.

Wellington

The QV House Price Index for the entire Wellington region shows home values rose 5.1% over the past three months and 12.4% year on year and values are now 13.3% higher than in the previous peak of 2007. The average value across the wider region there is now $516,430.

Home values in Wellington City suburbs continue to rise rapidly up 5.4% over the past three months and 14.4% year on year. The average value there is now $625,319. Lower Hutt rose 9.5% in the year since June 2015 and 4.6% over the past three months and the average value there is now $413,488; while Upper Hutt values were up 8.6% year on year and 4.9% over the past three months; Porirua also 10.5% year on year and 3.8% over the past three months and the Kapiti Coast was up 10.0% year on year and 4.6% over the past three months.

QV homevalue Wellington Registered Valuer, Pieter Geill said, “Properties are continuing to sell well across Wellington and the Hutt Valley.”

“There remains an extreme shortage of properties listed for sale on the market, so there is strong competition and this is pushing values up.”

“The Buyer Enquiry Over and deadline sale options for selling have been getting good results although some auctions have been getting spectacular results too.”

“We are seeing all properties selling, even monolithic sheathed homes, properties with poor interior layout or with little sun that would have had strong buyer resistance a year ago. It appears buyers are prepared to make compromises to enable them to buy a home.”

“Investors are also taking the opportunity to rationalise their portfolios by selling difficult to let or high maintenance properties and they remain very active in the market particularly those who are interested in buying blocks of flats.”

“Even large scale blocks over the $1 million bracket have been getting interest from a larger pool of investors, which has seen yields fall to levels normally associated with smaller blocks.”

“The apartment market is going from strength to strength in Wellington City and new apartment developments are very popular and are selling very well off the plan.”

“The Hutt Valley market has strong levels of activity and demand and Petone has had its first townhouse sale at $1,150,000 in the past month.”

“Upper Hutt has large tracts of land opening up for development and there are good opportunities to get new homes on level sites on the old Wallaceville Research Centre land.”

Christchurch

Home values in Christchurch City increased 3.6% year on year and by 1.1% over the past three months and they are 29.5% higher than the previous peak of 2007. The average value in the city is $491,148.

QV homevalue Christchurch, Registered Valuer Damian Kennedy said, “The Christchurch market can be characterised as less speculative, and more realistic, than other faster moving markets around the country.”

“We are seeing a slow and steady increase in values across the market and despite there being a shortage of listings on the market across all value ranges this does not seem to have led to upward pressure on value levels.

“It’s possible the lack of listings is due to the traditional winter slow-down. However, the low listings levels mean more competition for those homes that are on the market, so even though it’s cold, it may be a good time to sell.”

“If you are looking to buy property in Christchurch, it is imperative to get a qualified building report before making any offers, due to there being so much variation across properties in terms of their earthquake damage.”

QV is also reminding Christchurch property owners that if their properties have unrepaired damage they are asked to complete an online survey so this can be taken into account in the Christchurch City Rating Revaluation being carried out this year. The survey is can be downloaded or completed online by clicking the link onwww.ratingvalues.co.nz

Dunedin

Home values in Dunedin continues to show high levels of activity and demand and values in the city are up 10.7% in the year to June, 2016 and 4.0% over the over the past three months. The average value in the city is now $327,664.

QV homevalue Dunedin Registered Valuer, Duncan Jack said, “The Dunedin market is buoyant and is experiencing strong levels of activity and demand leading to rising values.”

“There is a shortage of listings on the market and while this has been the case for quite some time, it appears more pronounced currently so this could be due to the traditional winter slow down.”

“Properties that are on the market have been selling quickly and attracting multiple offers across all value ranges.”

“A lot of investors in Dunedin look to returns and capital gain over the medium and long term, but the recent rapid growth in the market may start to attract some investors who are looking to make quicker capital gains.”

Hawkes Bay

Napier home values continued to show strong growth increasing by 13.0% over the past year and 4.0% over the past three months. The average value in the city is now $372,963. While Hastings values also continue on an upward trend rising 11.6% in the year to June and 4.4% over the past three months. The average value there is now $345,577.

QV homevalue Hawkes Bay, Registered Valuer Bevan Pickett said, “The market is continuing to display the strength of the last few months.

“Tenders and auctions have become the preferred method of sale as vendors don’t want to put a cap of possible sales prices and with multiple offers are now the norm and sale prices are commonly eclipsing vendor and agent expectations.”

“The entry level and investment sectors of the market are particularly buoyant and have had significant value growth.”

There is a lack of quality listings and the high demand and lack of listings mean potential purchasers are having real difficulty with entering the market.

Nelson

Nelson home values 11.4% in the year to June 2016 and 3.1% over the past three months. The average value in the city is now $460,495. The Tasman District also increased by 9.8% over the past year and 3.4% over the past three months and the average value in the district is now $456,144.

QV homevalue Nelson Registered Valuer Craig Russell said, ““There is no sign of a winter slow-down in the Nelson residential property market with values continuing to climb in ideal market conditions for vendors.”

“We are experiencing a seller’s market with a low supply of homes listed for sale and strong demand driven from cheap lending rates and the Auckland flow-on effect where investors are looking to the regions for better yields.”

“There is a clear shortage of listings on the market with some agents having few properties left on their books.”

“No price marketing such as tenders or auctions have become more common as vendors don't want to put a cap on a potential sale price which are often exceeding expectations.”

“We have seen a lift in land values in recent months across the board. New developments in the likes of Motueka traditionally have lower land values and are popular with younger people taking advantage of KiwiSaver first home incentives and lower deposit requirements on new builds.”

“We have seen increased activity and interest in executive quality homes particularly around Richmond.”

“Given the regions ageing population low maintenance centrally located flats have been selling well and often sell in a short time frame.”

Other Provincial centres

In the North Island, values in many regional centres are rising at the fastest rate since prior to the previous peak of 2007 after a long period of being flat or rising only slowly. Such as the Far North District up 13.5% year on year and 4.7% over the past three months; Whakatane which has risen 14.8% year on year and 9.1% over the past three months and Opotiki up 21.6% year on year and 7.9% over the past three months. Carterton and Masterton are the only North Island areas to see values decrease just slightly by 0.8% and 0.1% respectively.

In the South Island, Invercargill values are the rise again after being flat for a number of years, up 6.3% year on year and 1.7% over the past three months; Central Otago District values are also accelerating up 17.2% year on year and 7.9% over the past three months. The nearby MacKenzie District values rise, up 14.9% year on year and 3.6% over the past three months. The only places in the South Island where values decreased were the Clutha District down 1.7% over the past three months; the Westland District down 4.4% and the Hurunui District down 0.5% over the same period.

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