Lifestyle regions continue strong growth
New Zealand’s more affordable lifestyle regions continue to see strong value growth, in a market that is quietening heading into winter.
The Bay of Plenty region is an excellent example of a lifestyle region continuing to experience steady growth over the past quarter. Tauranga, with a relatively high average value of $741,501, has seen values increase by 2.3% over the past quarter.
Despite the strong regional growth figures, the latest QV House Price Index figures show that value growth continues to slow nationally. The rate of annual growth nationally dropped from 6.9% in May last year to 2.3% at the same time this year. The rate of quarterly value growth, nationally, has dropped to 0.1%.
Meanwhile, residential property value growth across the Auckland Region decreased by 2.1% year on year and by 1.4% over the past quarter. The average value for the Auckland Region is now $1,030,439.
For a full breakdown of the QV House Price Index figures for May please click here
QV Senior Consultant, Paul McCorry said, “With the colder weather arriving, we’re seeing the expected lull in the national property market. This seasonal fluctuation is something we anticipate, as people put off selling until the spring and summer period.”
“Our major centres are seeing the market soften, with Auckland continuing to record single digit negative growth over the quarter and the capital city seeing values plateau over the last three months. The rate of value growth has also started to slow in Dunedin following a succession of strong quarters.”
“At the same time, many regional centres are still very much in the upward stage of their growth cycle and continue to achieve strong yearly and quarterly value increases."
"These areas, which are generally more affordable such as Wanganui, Manawatu and Palmerston North, continue to attract plenty of buyer demand. Attractive lifestyle regions such as the Bay of Plenty and the Hawkes Bay continue to post good year on year growth, which shows there is still plenty of scope for continued growth in these appealing locations.”
“Following on from the announcement in April that there would be no new Capital Gains Tax, the Reserve Bank have also given a boost to lenders announcing a further cut in the Official Cash Rate by 25 basis points. It remains to be seen how much of this rate cut will be passed on to banks day to day customers but it is definitely good news for borrowers. With historic low mortgage lending rates on offer, budgets have the potential to extend a little further.”
“Our Property Consultants are reporting that whilst well-presented and competitively priced homes continue to attract multiple offers, gone are the days where every vendor is guaranteed a handful of sealed envelopes on tender day. Sellers and their agents are now having to work extra hard to attract buyers towards higher-value properties. As a result, competitive pricing and effective marketing has become an increasingly important part of the sales process.”
“Managing expectation remains key for real estate agents, particularly in the major cities where there can be a disconnect between the vendors price expectations and what buyers are willing to offer. For this reason, we’re seeing a shift away from deadline and tender sale processes to fixed price or price by negotiation. While it isn’t a buyers’ market just yet, this trend does represent a shift in power to some degree.”
“As winter settles in, it will be no surprise to see listing numbers reduce and days to sell increase. It is very plausible that minor negative growth will persist in Auckland and perhaps in other regions. However, despite the subdued activity, the current low interest rate environment coupled with loan-to-value ratios designed to insulate the market against a major downturn should mean that similar market conditions will prevail over the coming months.”
Value growth remains slow across Auckland's suburbs. North Shore values dropped 3.9% in the year to May and by 2.2% over the past three months. The average value there is now $1,179,660.
The former Auckland City Council central suburbs dropped 2.6% year on year and by 1.8% over the past three months and the average value there is now $1,210,726. Waitakere values decreased by 1.4% year on year and by 0.7% over the past three months. Manukau values decreased by 0.8% year on year and by 0.5% over the past three months; Papakura values increased 0.7% year on year and by 1.6% over the last quarter and the average value there is now $707,659; Franklin values increased by 1.0% year on year and Rodney values were up 0.6% year on year.
QV Auckland Property Consultant James Steele said, “Affordability constraints and the foreign buyer policy has impacted premiums previously paid in higher value central and northern suburbs."
“Large high value subdivisions in Greenfield areas with excess developed land or land under development continue to see prices drop."
“In saying this, a good flow of entry level buyers has supported lower-value suburbs.”
“Investors generally remain absent, with the main exception being those with ‘added value’ strategies or those targeting small scale brownfield redevelopment sites which are free of complications.”
“Presentation, effective marketing, and location remain key to strong sales, mixed in amongst the many price reductions we are now seeing as vendors continue to adjust their price expectations from the peak.”
QV Auckland Property Consultant Hugh Robson added, “The market continues to be flat overall. In saying this, we’re noticing an increase in mortgagee sales lately.”
“We’re seeing that more properties are on the market with asking prices and a general trend away from running auctions. This generally happens in a market favouring buyers.”
“We continue to sell well-located and maintained properties sell well particularly in inner city suburbs. Rents, as expected, continue to rise moderately.”
Tauranga home values rose 5.9% year on year and by 2.3% over the past three months. The average value in the city is $741,501. The Western Bay of Plenty market rose 7.3% year on year and by 3.6% over the past three months. The average value in the district is now $675,491.
QV Tauranga Property Consultant Alecia Dalzell said, "Demand continues to be steady for properties in new subdivisions in the $700,000 - $800,000 bracket along with section sales and older homes requiring renovation. High valued beach front properties still have longer marketing periods, however these are still selling well around asking price."
Hamilton City home values increased by 0.8% over the past three months and by 4.9% in the year to May. The average value in Hamilton is now $585,155.
Values across the whole Wellington Region rose 7.8% in the year to May and increased 1.0% over the past quarter and the average value is now $706,517.
Wellington City values increased 6.3% year on year and by 0.6% over the past three months and the average value there is now $829,167. Meanwhile, values in Upper Hutt rose 14.7% year on year and 3.2% over the past three months; Lower Hutt rose 9.7% year on year and by 1.8% over the past quarter; Porirua rose 6.7% year on year and by 0.4% over the past quarter. Finally, the Kapiti Coast rose 7.0% year on year and 2.3% over the past three months.
QV Wellington Senior Consultant, David Cornford said, “General market activity has started to drop off as we move into the winter months. We’re seeing less attendance at open homes and fewer offers are being made.”
“Buyers continue to take a more measured approach, however strong prices continue to be achieved by vendors.”
“Value growth year on year has been relatively strong however quarterly growth is more subdued, with only modest gains being recorded. We would anticipate this as we move into the quieter winter period.”
“There is more stock on the market compared to recent years however the Wellington region is still significantly under supplied. This is a key reason behind the steady value growth seen across the region in recent times.”
“The current government has recently ruled out a capital gains tax and interest rates are at record low levels, which is driving increased investor activity. We believe this may translate into continued higher prices in the second half of 2019.”
Nelson residential property values rose 8.3% in the year to May and by 2.0% over the past quarter. The average value in the city is now $624,574. Meanwhile, values in the Tasman District have also continued to rise, up 5.4% year on year and 0.6% over the past three months. The average value in the Tasman district is now $602,759.
QV Nelson Senior Consultant, Craig Russell said, “The upper end of the market still appears to be performing strongly particularly in the central city and Port Hills.”
“Values have generally been more subdued for the remainder of the housing stock with properties in the $700,000 to $900,000 price bracket in particular requiring an extended selling period, with a number of new homes constructed pitched in this value bracket.”
“A number of investors have sold their lower performing properties in recent months given the lack of anticipated capital growth and increased compliance costs going forward. The Reserve Bank’s decision to lower the Official Cash Rate, and the Government decision to scrap a capital gains tax will provide landlords with some much needed relief.”
It’s a continuation of recent trends for Christchurch City, with value growth remaining modest. Values are slightly up year on year and slightly increased by 0.7% over the past three months. The average value in the city is now $498,801.
Dunedin residential property values are continuing to rise albeit at a slower rate than in recent months. Values have increased 11.5% in the year to May and by 1.6% over the past three months. The average value in the city is $456,183.
Whanganui leads the way in quarterly growth, up 9.1%, followed by Waitomo (7.6%) and Manawatu (6.6%). In terms of annual growth, Kawerau leads the way, up 29.3%, followed by South Waikato (18.0%) and Tararua (17.8%).
Mackenzie lead the way in quarterly growth, up 8.5%, followed by Clutha (4.9%) and Invercargill (4.9%) Invercargill leads the way in annual growth, up 13.5% followed by Southland (12.6%) and Clutha, up 10.8%.