Value growth remains modest

Spring has injected energy into the market, with open homes busy across many parts of New Zealand. Despite this pick-up in activity, supply still remains low which is keeping values at or near their current levels.

First home buyers continue to be a major force across many parts of New Zealand, particularly in the more affordable parts of the Wellington and Christchurch regions. At the same time, New Zealand’s high-value areas - those containing properties with an average value above one million - are generally seeing a slowdown in the rate of growth as affordability constraints take effect.

The latest QV House Price Index shows nationwide residential property values have increased steadily over the past year by 5.4% and by 1.0% in the three months to October. The nationwide average value is now $681,802.

Meanwhile, residential property value growth across the Auckland Region increased by 1.1% year on year although dropped by 0.3% over the past quarter. The average value for the Auckland Region is now $1,049,689.

For a full breakdown of the QV House Price Index figures for October, please click here.

QV General Manager, David Nagel said, “As anticipated, value growth remains modest across many areas as affordability constraints put the brakes on after a period of sustained growth.”

“Undoubtedly, the heat has been taken out of the market in recent months. A key market indicator, the median days to sell, is up across many regions including Auckland. The Super City, in particular, is seeing vendors’ sales price expectations being challenged. However, in many cases, sellers’ are refusing to sell below their expectations which is keeping values either at or slightly below their current levels.”

“Despite this slowdown, GDP growth remains strong and the labour market continues to perform well which is underpinning a seemingly steady market. These factors, coupled with a steady interest rate environment and strong net migration, signal that the market is in a relatively strong position.”

“A real positive is the continued resurgence of first home buyer activity. The latest CoreLogic Buyer Classification data indicates that first home buyers remain a major presence across most main centres, particularly in the Wellington and Christchurch regions.”

“Over the coming months, I’ll be closely following investor activity as we see what impact the Foreign Buyer ban will have on the market. I’d anticipate the low-to-med priced section of the market to remain busy and first home buyers to continue to be a strong presence throughout the summer months.”

Auckland
Value growth remains slow across Auckland's suburbs. North Shore values rose 1.4% in the year to October although they dropped 0.5% over the past three months. The average value there is now $1,217,762.

The former Auckland City Council central suburbs rose 1.2% year on year and were 0.6% down over the past three months and the average value there is now $1,238,448. Waitakere values increased by 1.2% year on year and by 0.5% over the past three months. Manukau values increased by 1.1% year on year and by 0.4% over the past three months; Papakura values rose 2.4% year on year but dropped by 0.6% over the last quarter and the average value there is now $700,919; Franklin values increased 0.8% year on year and Rodney values were up 0.8% year on year.

QV Auckland Property Consultant, Hugh Robson said, “Listings have moderately increased and overall market activity is steady.”

“There is certainly plenty of construction taking place, such as Housing New Zealand and private sector initiatives. We’re continuing to see plenty of apartment style developments underway, which is helped by the Unitary Plan that many developers are utilising.”

“The Southern and Western parts of Auckland appear busy and investors seem to be relatively active. School zoning also continues to have a big impact on market demand and value growth.”

Wellington
Values across the whole Wellington Region rose 10.2% in the year to October and increased 2.9% over the past quarter and the average value is now $672,701

Wellington City values increased 9.6% year on year and by 3.9% over the past three months and the average value there is now $809,739. Meanwhile, values in Upper Hutt rose 6.2% year on year and 0.9% over the past three months; Lower Hutt rose 3.6% year on year and 0.3% over the past quarter; Porirua rose 8.3% year on year and 2.4% over the past quarter. Finally, the Kapiti Coast rose 7.1% year on year and 0.6% over the past three months.

QV Wellington Senior Consultant, David Cornford said, “Many areas across the region have seen a sharper rate of growth compared to recent months.”

“New listings have increased recently although the total numbers of listings are similar to this time last year. This low level of supply means values are either staying flat or increasing particularly in Wellington and Porirua City.”

“The warmer weather, a low interest rate environment, tight supply and a desire from buyers to get settled before Christmas, has all combined to support modest value growth recently.“

“The more affordable northern Wellington suburbs continue to be standout performers with 5.2% growth recorded over the last three months, which highlights the influence of first home buyers and investors in these areas. Multiple offers on those properties priced under $700,000 continue to be the norm, unless the property has limiting or detrimental features.”

“There also continues to be a shortage of rental accommodation in the Wellington region and a significant number of mature investors have offloaded their rental properties, capitalising on strong values seen over the last two years.”

Hamilton
Hamilton City home values rose 2.8% over the past three months and values increased 5.7% in the year to October. The average value in Hamilton is now $573,757.

QV Hamilton Property Consultant, Andrew Jacques said, “The market appears to be relatively stable, with prices holding strong due to a lack of listings. Demand remains steady, with high numbers of people flowing through open homes.”

“Demand for larger blocks of land remains high, with many choosing to demolish existing housing and erect multiple duplex style housing on the site.”

“Finally, house and land packages continue to sell well, particularly in Rotokauri in the Western suburbs and Rototuna and Flagstaff North in the Northern suburbs.”

Tauranga
Tauranga home values rose 3.3% year on year and by 1.2% over the past three months. The average value in the city is $709,746.

The Western Bay of Plenty market rose 0.9% year on year and 0.4% over the past three months. The average value in the district is now $633,158.

Christchurch
It’s a continuation of recent trends for Christchurch City, with values either holding or dropping slightly. Values are slightly up year on year although they decreased by 0.3% over the past three months. The average value in the city is now $494,082.

QV Christchurch Property Consultant Hamish Collins said, “We’re seeing typical seasonal fluctuations, with listings increasing giving buyers more options. We’re anticipating a busy end to the year, before a quieter period just prior to Christmas.”

“We’re seeing vendors’ sales price expectations being challenged, however in some cases sellers’ are refusing to budge and withdrawing their properties from the market when their expectations are not met. Typically, sales are occurring where real estate agents are managing vendor expectations carefully.”

“Christchurch is benefiting from being a relatively affordable city and there is excitement about the various construction projects on-the-go. The city continues to attract first home buyers particularly in the low-to-med value areas.”

“The high-end of the market, those properties in the range of 1.5 million and above, appears to be slowing. There are currently 110 properties in this price bracket currently listed, which is relatively high for the city.”
“Potential buyers are also showing signs for caution, possibly influenced by perceptions that the market is, and will continue, to slow. As a result, buyers are reluctant to over-extend themselves.”

“We’re also seeing that properties with areas of deferred maintenance or areas of unrepaired earthquake damage are not selling well and often sell for discounts.”

“In saying this, demand for development land in the central city remains fairly strong with some record prices being offered for vacant pieces of land. It’ll be interesting to see how this part of the market develops.”

Dunedin
Values in Dunedin continue their upward trend having increased 10.5% in the year to October and 2.8% over the past three months. The average value in the city is $422,674.

QV Dunedin Property Consultant, Aidan Young said, “Buyer competition remains intense, particularly in the $300,000-400,000 price bracket where first home buyer activity is relatively high.”

“We’re continuing to see good numbers at open homes and properties are selling relatively quickly. In this type of market, deadline sale methods are a popular choice for sellers’ who are looking to achieve an optimal sale price, while also allowing interested parties to undertake their due diligence process.”

Nelson
Nelson residential property values rose 7.7% in the year to October and by 1.7% over the past quarter. The average value in the city is now $593,947. Meanwhile, values in the Tasman District have also continued to rise, up 7.2% year on year and 1.0% over the past three months. The average value in the Tasman district is now $586,219.

QV Nelson Property Consultant, Craig Russell said, “Listings have increased in recent months and we’re also seeing good numbers at open homes.”

“Residential land values have significantly increased in the city-centre, mostly due to its lifestyle appeal and the limited supply of properties. The College and Cathedral area, in particular, has proven popular given its proximity to good schooling and central city amenities. Modernised character homes in this area are generally selling in excess of $900,000.”

“At the same time, properties that are mostly in original condition or have significant deferred maintenance evident have proven difficult to sell or have sold at more modest levels particularly in the Port Hills.”

“Investor activity has also been quieter than usual, which is a likely result of more modest returns, a limited prospect of strong capital growth in the short to medium term and increased compliance costs on the horizon.”

Hawkes Bay
Napier values rose 10.3% year on year and by 0.2% over the past three months. The average value in the city is now $515,304. Hastings values are also continuing to rise up 6.6% year on year and 1.9% over the past three months. The average value there is now $465,161.

QV Property Consultant Philippa Pearse said, “The market in both Napier and Hastings is still strong with unsatisfied purchasers but we are also seeing high vendor expectations in some instances.”

The Central Hawkes Bay has also seen values rise 19.7% year on year although they did drop by 5.4% over the past three months and the average value there is now $340,811.

Pearse added, “First home buyers are active in Central Hawke’s Bay taking advantage of the Welcome Home Loans as average values in Hastings and Napier have increased above the maximum level for the loans. We understand many of the sales have been multi-offer situations which have also increased sale prices.”

Provincial centres
In the North Island, Kawerau, South Waikato and Rangitikei lead the way in quarterly growth, with value growth of 18.7%, 17.9% and 11.2% respectively. These same regions also experienced strong annual growth, as well as the Central Hawkes Bay, Whanganui and Tararua regions.

In the South Island, Clutha, Westland and Invercargill regions lead the way in quarterly growth, with value growth of 7.1%, 5.4% and 4.9% respectively. Invercargill lead the way in annual growth, up 13.1%.

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