Property data shows big jump in residential value

21 March 2018

Property data shows big jump in residential value of kiwi cities

Property Institute of New Zealand Chief Executive Ashley Church says that new data showing that the residential value of kiwi cities is closing in on $1 trillion dollars is both good and bad news for the New Zealand housing market and wider economy.

The revelation of the big jump in value, between 2015 and 2018, is one of several findings in a new report, released by the Property Institute and property market data company Valocity. The report measured the combined value of residential housing stock in New Zealand and found that, taken as a single entity – residential housing in New Zealand is now worth $941,611 – up from $667,718 in 2015.

The report also showed that the value of residential housing in all of our main centres is also up – although the impact of this growth in value is uneven with Tauranga at one extreme with growth of 63.27% and Christchurch at the other extreme with growth of just 11.6% over the 3 years.

In all cases, except Hamilton, price growth in 2017 was the same, or greater than 2016.

Auckland is now worth $469 billion (up from $344 billion in 2015)
Wellington is now worth over $88 billion (up from around $60 billion in 2015)
Christchurch is now worth over $67 billion (up from around $60 billion in 2015)
Tauranga is now worth over $34 billion (up from around $21 billion in 2015)
Hamilton is now worth around $28 billion (up from around $18 billion in 2015)
Dunedin is now worth almost $17 billion (up from around $12 billion in 2015)

Mr Church says that the biggest surprise in the report was the finding that house price growth was stronger, in 2017, than it was in 2016.

“There’s been a general consensus that the market has been flattening – but this data suggests that it’s more a case of growth moving away from Auckland to other parts of the country. That’s not entirely unexpected as house price booms in regional centres usually start later than Auckland and continue for a while after a boom in Auckland has ended – but the extent of the strength of those prices, particularly in Tauranga and Wellington, is still surprising”.

Mr Church says that the news is both good and bad for the housing market and wider economy.

“We don’t tend to think of residential property as part of the productive sector of the economy – but when you see the growth in house values, like this, as a combined figure, you can appreciate that the country is now ‘worth more’ and that our ‘common wealth’ as a nation has increased. That has all sorts of positive implications for things like lower interest rates, improvements in international indicators, and an improvement in our preparedness for increased numbers of kiwis entering retirement”.

Mr Church says that the figures also mean that many of those of who own property are now wealthier than they were 3 years ago.

However, Mr Church also says that the new data isn’t all good news.

“The report also tells us that houses are now even more expensive – and not just in Auckland – which means it’s even harder to get into the market than it was 3 years ago”.

“It also means that the baseline cost for ‘affordable’ housing programs - such as Kiwibuild - will keep increasing as land and building costs increase. That’s a strong argument to get those houses built as quickly as possible”.

Mr Church says that the figures also mean that the economy has now become even more sensitive to interest rate increases.

“To the extent that this increase in house prices is mortgage funded we’re now that much more susceptible to a major hit on the economy if interest rates were to increase too much over the next few years”.

Mr Church says that the data has several implications for economic and housing policy.

“These figures mean that the speed at which the Reserve Bank removes the Loan-to-Value limits will need to be sped up to ease deposit pressure on first home buyers; the speed at which Kiwibuild is rolled out will need to be accelerated in order to ‘front end’ the construction of homes before costs increase even further; and the Government needs to look harder at policies to increase productivity and wages so that the average kiwi isn’t permanently priced out of the housing market”.

OTHER HEADLINE RESULTS FROM THE REPORT

Nationwide, the value of residential property rose from around $667,718 billion in 2015 to $941,611 billion in 2018 (41.07%)

Auckland

In Auckland, the value of residential property rose from around $343,944 billion in 2015 to $469,045 billion in 2018 (36.37%)
The most valuable suburb in Auckland is Herne Bay with a median value of $2.4 million
The most reasonably priced suburb in Auckland is Grafton with a median value of $382k
The Auckland suburb with the biggest movement in value is Morningside with an increase of 73% between 2015 and 2018
The Auckland suburb with the smallest movement in value is Okura with an increase of 13% between 2015 and 2018

Wellington

In Wellington, the value of residential property rose from around $60,191 billion in 2015 to $88,639 billion in 2018 (47.26%)
The most valuable suburb in Wellington is Oriental Bay with a median value of $1.9 million
The most reasonably priced suburb in Wellington is Timberlea with a median value of $369k
The Wellington suburb with the biggest movement in value is Moera with an increase of 68% between 2015 and 2018
The Wellington suburb with the smallest movement in value is Melling with an increase of 19% between 2015 and 2018

Christchurch

In Christchurch, the value of residential property rose from around $60,505 billion in 2015 to $67,527 billion in 2018 (11.6%)
The most valuable suburb in Christchurch is Kennedys Bush with a median value of $1.1 million
The most reasonably priced suburb in Christchurch is Aranui with a median value of $281k
The Christchurch suburb with the biggest movement in value is Edgeware with an increase of 36% between 2015 and 2018
The Christchurch suburb with the smallest movement in value is Southshore with an decrease of -3% between 2015 and 2018

Tauranga

In Tauranga, the value of residential property rose from around $21,076 billion in 2015 to $34,412 billion in 2018 (63.27%)
The most valuable suburb in Tauranga is Bethlehem with a median value of $771k
The most reasonably priced suburb in Tauranga is Gate Pa with a median value of $445k
The Tauranga suburb with the biggest movement in value is Matapihi with an increase of 68% between 2015 and 2018
The Tauranga suburb with the smallest movement in value is Tauranga South with an increase of 49% between 2015 and 2018

Hamilton

In Hamilton, the value of residential property rose from around $17,952 billion in 2015 to $28,008 billion in 2018 (56.01%)
The most valuable suburb in Hamilton is Taupiri with a median value of $930k
The most reasonably priced suburb in Hamilton is Nawton with a median value of $417k
The Hamilton suburb with the biggest movement in value is Whitiora with an increase of 71% between 2015 and 2018
The Hamilton suburb with the smallest movement in value is Riverlea with an increase of 36% between 2015 and 2018

Dunedin

In Dunedin, the value of residential property rose from around $12,079 billion in 2015 to $16,887 billion in 2018 (39.8%)
The most valuable suburb in Dunedin is The Cove with a median value of $681k
The most reasonably priced suburb in Dunedin is Purakaunui with a median value of $214k
The Dunedin suburb with the biggest movement in value is Long Beach with an increase of 68% between 2015 and 2018
The Dunedin suburb with the smallest movement in value is Purakaunui with an increase of 26% between 2015 and 2018

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