Dunedin and Wellington continue to lead the way

New Zealand’s ‘more affordable’ main centres, particularly Dunedin and the wider Wellington region, continue to show a strong rate of growth in a cooling market.

Dunedin, with a relatively affordable entry-level price coupled with attractive premium areas, continues to appeal to a variety of buyers, leading to strong quarterly value growth of 3.8%.

The wider Wellington region, with quarterly growth of 4.0%, continues to see values steadily increase as buyers continue to be attracted to the more affordable outer city areas such as Porirua and the Hutt Valley.

At the same time, the ‘top-end’ of the market – those areas with average values above one million such as the Queenstown Lakes – are generally experiencing a cool down in market activity and growth.

The latest QV House Price Index shows nationwide residential property values have increased steadily over the past year by 3.5% and by 1.3% in the three months to November. The nationwide average value is now $681,545.

Meanwhile, residential property value growth across the Auckland Region increased by 0.4% year on year and by 0.1% over the past quarter. The average value for the Auckland Region is now $1,050,647.

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

QV General Manager, David Nagel said, “Our latest insight reflects what we’re seeing and hearing in the market; there is still plenty of activity taking place following the ‘spring surge’ in activity although value growth is fairly modest overall.”

“Dunedin and the wider Wellington region continue to lead the way, where value growth remains strong. These regions appeal to a broad range of buyers, particularly first home buyers and investors, due to their relative affordability and higher yields on offer. These factors enable the values in these regions to continue their upward trend, even in a cooling market.”

“The recently announced loosening of the LVR restrictions should inject energy into the market although I wouldn’t anticipate its impact will be overly significant. In the big scheme of things, it’s still a relatively minor change although it may result in new first home buyers and investors entering the market in the New Year, which could drive further value growth.”

“We’re expecting more of the same throughout summer. The warmer months should continue to keep listings at a healthy level although the busy Christmas period may reduce activity slightly as people hold of selling until things quieten down in January and February.”

Auckland
Value growth remains slow across Auckland's suburbs. North Shore values rose 0.2% in the year to November and by 0.1% over the past three months. The average value there is now $1,215,601.

The former Auckland City Council central suburbs dropped 0.2% year on year and by 0.1% over the past three months and the average value there is now $1,239,592. Waitakere values increased by 0.6% year on year and by 0.6% over the past three months. Manukau values increased by 1.7% year on year and by 0.9% over the past three months; Papakura values rose 1.0% year on year but dropped by 0.6% over the last quarter and the average value there is now $698,825; Franklin values increased 1.8% year on year and Rodney values were up 0.8% year on year.

QV Auckland Property Consultant, Hugh Robson said, “The market appears to be fairly steady at the moment and I am certainly noting a lot of activity from first home buyers.”

“We’re continuing to see that tidy or renovated properties in good locations are selling quickly and there is a lot of focus on new subdivisions.”

Wellington
Values across the whole Wellington Region rose 8.1% in the year to November and increased 4.0% over the past quarter and the average value is now $685,387.

Wellington City values increased 7.4% year on year and by 3.5% over the past three months and the average value there is now $805,442. Meanwhile, values in Upper Hutt rose 8.8% year on year and 2.4% over the past three months; Lower Hutt rose 9.2% year on year and 5.8% over the past quarter; Porirua rose 9.3% year on year 4.6% over the past quarter. Finally, the Kapiti Coast rose 6.5% year on year and 2.2% over the past three months.

QV Wellington Senior Consultant, David Cornford said, “Record low interest rates and low levels of inventory are underpinning moderate value growth, particularly at the low-to-mid priced section of the market.”

“The recently announced easing of LVR (Loan-to-Value Ratio’s) for both first home buyers and investors is likely to inject a bit more activity into the market in the New Year, however it’s a relatively minor change to the current rules and we are unlikely to see a significant impact on value levels.”

“There is plenty of residential development going on throughout the region ranging from single dwelling developments through to large-scale subdivisions and apartment buildings. These developments continue to provide additional supply, however this is being offset by population growth which continues to fuel demand.”

“Many of the new homes being constructed in the region will be out of the price range for first home buyers, however it will free up cheaper homes for these buyers.”

“Rents have significantly increased in the Wellington region over the last 12 months, particularly in the Hutt Valley and Porirua, and we’re likely to see a continuation of this upwards trend into 2019 until supply constraints are properly addressed.”

“Investors continue to be active in the market, attracted by high rents which are trending upwards. At the same time, we’re seeing some investors offloading their investments due to impending legislation changes.”

Hamilton
Hamilton City home values rose 1.2% over the past three months and values increased 4.0% in the year to November. The average value in Hamilton is now $565,859.

Tauranga
Tauranga home values rose 3.9% year on year and by 1.2% over the past three months. The average value in the city is $713,859.

The Western Bay of Plenty market rose 2.3% year on year and 0.9% over the past three months. The average value in the district is now $640,530.

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 and also increased by 0.3% over the past three months. The average value in the city is now $495,742.

QV Christchurch Property Consultant Hamish Collins said, “It’s appears to be a steady market at the moment, with a good level of activity leading into Christmas.”

“Early indications suggest there might be more investor interest following the LVR changes, so we’ll be following this closely in the coming months. At the same time, we’re also seeing tough serviceability criteria being applied by the banks.”

“Finally, we’re seeing a slowing of new builds particularly on the periphery of the city centre.”

Dunedin
Values in Dunedin continue their upward trend having increased 11.7% in the year to November and 3.8% over the past three months. The average value in the city is $431,665.

QV Dunedin Property Consultant, Aidan Young said, “Buyer competition remains high and we’re seeing well-presented properties in sought after locations generally selling quickly.”

“First home buyers remain active, particularly in the lower end of the market up to the $400,000 mark.”

“Multi-offers in tender sales remain common and there’s a good level of activity at auctions across all value ranges, which reflects the fact that Dunedin very much appeals to a broad range of buyer types.

‘Finally, open homes still appear very busy indicating that the market remains active following the spring surge in the lead up to Christmas”

Nelson
Nelson residential property values rose 8.0% in the year to November and by 1.6% over the past quarter. The average value in the city is now $597,533. Meanwhile, values in the Tasman District have also continued to rise, up 5.9% year on year and 0.1% over the past three months. The average value in the Tasman district is now $585,913.

QV Nelson Property Consultant, Craig Russell said, “Demand remains firm with first home buyers taking advantage of Kiwi Saver incentives and the record low interest rates on offer.”

“There was plenty of sales activity in November, with sales volumes up particularly in the low-to-mid value range.”

“A number of residential developments are being developed in Nelson and Tasman, which generally comprise of ‘cookie cutter’ type homes on compact sections. These properties are generally in the new home entry level price bracket of $550,000 to $750,000.”

“The recently announced easing of the LVR restrictions is anticipated to only have a minor impact on the market and it’s unlikely to entice an influx of investors back to the market given impending legislation changes.”

“Rents continued to rise during 2018, with the easing of these LVR restrictions unlikely to add sufficiently to the supply of rental properties which have a higher occupancy rate per household than owner-occupier properties.”

“The recent announcement to proceed with the Waimea Dam will provide vendors and prospective purchasers with surety in their decision-making process.”

Hawkes Bay
Napier values rose 10.2% year on year and by 2.0% over the past three months. The average value in the city is now $521,981. Hastings values are also continuing to rise up 5.1% year on year and 1.2% over the past three months. The average value there is now $465,441.

QV Property Consultant Nicola Waldon said, “We continue to see a low supply of properties although, as anticipated, we have seen an increase since the winter months.

“Multi-offer scenarios are relatively commonplace, which does indicate that demand remains strong overall. Falling interest rates are a key factor supporting the high level of demand and keeping prices flat or increasing slightly.”

Provincial centres
In the North Island, Kawerau, South Waikato and Opotiki lead the way in quarterly growth, with value growth of 18.5%, 14.0% and 9.9% respectively. In terms of annual growth, Kawerau led the way, up 25.5% followed by Rangitikei (22.4%) and Central Hawkes Bay (19.6%).

In the South Island, MacKenzie, Buller and Clutha regions lead the way in quarterly growth, with value growth of 8.7%, 5.6% and 4.7% respectively. Invercargill lead the way in annual growth, up 12.2%, followed by Clutha (10.7%) and MacKenzie (8.9%).

Annual change in values

*Please note, our partners CoreLogic have incorporated an improvement to the methodology which underpins the November House Price Index figures. The change only concerns aggregated indices (i.e. where an index covers multiple Territorial Authority’s). This new methodology provides less volatility and a more precise measure of value changes. This change only impacts recent movements, with the historical series mostly not impacted. If you have any questions regarding the change, please get in touch with us by emailing communications@qv.co.nz

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