Auckland Property Values Decrease, While Regions Gain
Auckland regional values decrease in the last three months while regions continue to out-perform most of the main centres
The latest monthly QV House Price Index shows nationwide residential property values for September increased 4.3% over the past year. Values rose by 1.1% over the past three months and the nationwide average value is now $646,378 which is 56.0% above the previous market peak of late 2007. When adjusted for inflation the nationwide annual increase drops slightly to 2.5% and values are now 30.2% above the 2007 peak.
Residential property values across the Auckland Region increased 0.8% year on year. Values dropped by -0.6% over the past three months. The average value for the Auckland Region is now $1,039,066 and values are now on average 90.1% higher than the previous peak of 2007. When adjusted for inflation values dropped 1.0% over the past year and are 58.7% above the 2007 peak.
The full set of QV House Price Index statistics for all New Zealand for September can be downloaded by clicking this link: QV House Price Index (HPI) for September 2017.
QV National Spokesperson David Nagel said, “The reductions in quarterly value growth have extended from just the main centres last month to almost all the 15 major urban areas we track with the exception of Rotorua, Palmerston North, Dunedin and Invercargill.”
“The year on year growth is still showing double digit gains in many of New Zealand’s provincial towns; however the quarterly change shows a gradual slowing of the property market in almost all city locations.”
“Values are reflecting small decreases in all but a few isolated pockets of Auckland while Tauranga and Christchurch have also shown a small decline over the past quarter.”
“The normal spring surge in property listings still hasn’t eventuated throughout most of the country and this lack of supply has helped insulate the market from more significant falls in values.”
“While the property markets appear to have run out of puff in the main urban areas, there’s still plenty of activity in the smaller provincial towns which were slower getting started.”
“While there is uncertainty around who will govern the country in the coming weeks, there are policies that if agreed up on under a coalition government could influence the property market.”
“These include a gradual reduction on immigration numbers which has previously helped fuel the property market, particularly in Auckland and the increase in housing supply.”
“What will be most interesting will be whether a new government supports the relaxing of the Reserve Banks LVR restrictions as well as what support policies get rolled out to help first home buyers get onto the property escalator.”
Values have dropped in most parts of Auckland over the past three months: Rodney down -1.7%; Franklin -0.6%; Waitakere City -0.9%; North Shore -0.7%; Auckland City -0.1% and Manukau -0.3%. Papakura is the only Super City district where values increased over the past three months up 0.3%.
QV Auckland Senior Consultant, James Steele said, “Sales volumes are down to very low levels as demand is halted by the ability for purchasers to finance property deals.”
“The number of listings has also eased as there is little pressure at the moment for home owners to sell, as rents remain high and interest rates low, and a number of vendors and purchasers are taking a ‘wait and see’ approach until after a new government is formed.”
“The Auckland market has continued to flatten and we remain in a stalemate situation until a significant economic shock destabilises prices by further reducing demand/the ability to purchase and puts pressure on home owners to sell, or lending restrictions are eased allowing built up demand and limited supply to send prices upwards again.”
“Across the region we are still seeing strong demand from first home buyers for entry level homes, with investors largely removed from these markets. First home buyers seem better positioned to secure a home with less competition from investors and also now fewer properties are going to auction and more properties are being listed with an asking price as this allows more time for buyers to complete due diligence and make conditional offers.”
“Well-presented homes in desirable suburbs are still in strong demand by movers however there are issues with deals falling over due to trouble obtaining finance under retail banks stricter lending criteria.”
“Prices for new dwellings in large subdivisions have eased back, especially where speculation was a large part of the market, and builders have also noted a slowdown of work in these areas.”
“Those vendors who are keen or under pressure to sell are having to be more accommodating and flexible with their terms and conditions for buyers in order for sales to go through, including being more realistic with pricing and offering longer settlement periods.”
Hamilton City home values rose 1.3% over the past three months and 3.2% over the past year. Values are now 51.1% higher than the previous peak of 2007. The average value in Hamilton is now $546,402.
QV Hamilton Property Consultant, Andrew Jaques said, “The Hamilton City market has remained relatively stable over the last month; residential properties are taking on average around 31 days to sell, but may take longer to sell if properties are perceived as over-priced.”
“Home and land packages are still proving very popular and these continue to be built all over the northern suburbs of Hamilton such as Flagstaff North and Rototuna with buyers taking advantage of the lower deposit for new builds.”
“When properties are priced well within buyer’s expectations they can sell quickly and even attract multi-offers, and there are opportunities to negotiate prices with very few properties going to auction”.
“Townhouses, mainly around the university area, are providing solid returns for investors, however there are very few investors around and those that are still active are taking their time to make informed decisions as opposed to last year when the market was frantic.”
“Banks continue to take their time with decisions on finance, doing their due diligence, and we have seen first home buyers really put under the microscope with deals are falling through as opposed to last year when banks seemed more lenient.”
“There appears to be more hesitation from buyers and sellers as people wait to see what will happen after the election before making any major decisions.”
Tauranga home values increased 6.6% year on year but decreased -0.1% over the past three months. Values there are now 42.6% higher than the previous peak of 2007. The average value in the city is $686,759. The Western Bay of Plenty market increased 6.9% year on year and 0.4% over the past three months and the market is now 36.5% higher than the previous peak of 2007. The average value in the district is now $614,822.
QV Tauranga Spokesperson Melanie Lewis said, “The Tauranga and Western Bay of Plenty markets continue to perform at a steadier pace than previous months.”
“High-end desirable family locations such as Mount Maunganui and Bethlehem continue to be popular both with new people moving into the area and locals upsizing.”
“Demand from investors appears to have dropped off, concurrently however rent prices have stabilised.”
“As the warmer spring weather struggles to get off to a strong start, and the inconclusive results to the election, people are taking a ‘wait and see’ approach to both selling and buying”.
The QV House Price Index shows values in the Wellington region increased by 9.6% over the past year. Values in the wider region are now 33.1% higher than the previous peak of 2007.
QV Wellington Senior Consultant, David Cornford said, “In most localities value growth has flattened over the last three months:”
“Sales activity is down compared to the same time last year and properties are taking slightly longer to sell. However, with a lack of properties listed for sale Wellington continues to be a ‘seller’s market’.
“There is strong competition for well-presented, well-located properties and multi-offers are the norm with these properties and there is a strong presence from first home buyers in the market.”
“Although we are now post-election, uncertainty regarding the make-up of the Government continues and some people will delay their property related decisions until it becomes clear.”
“The strong value growth seen over 2016 has dissipated and this comes from a combination of factors including tighter lending criteria, increased deposit requirements, unaffordability in the market and slightly higher interest rates.
“We expect more stock to come to the market over the next few months and market activity will likely pick up.”
“The fundamentals for a strong property market prevail; these include positive net migration, low interest rates and a constrained construction industry.”
Christchurch City values have decreased -0.8% year on year and by -1.0% over the past three months. However values in the city are still 29.6% higher than the previous peak of 2007.
QV Christchurch, Senior Consultant Daryl Taggart said, “The negative growth for Christchurch year on year is a reflection of how much the market has changed since last year with both buying and selling more difficult due to lending restrictions, especially for those who are looking to buy an investment property”.
“However, it’s not all bad news as there are certainly properties selling and sales coming through, some which have achieved good results in these tougher conditions.”
Dunedin residential property values continue to rise but at a slower rate than earlier in the year with quarterly growth of 1.4%. Values rose by 12.2% in the year and are now 33.0% above the previous peak of 2007. The average value in the city is now $380,701.
QV Dunedin Property Consultant, Aidan Young said, “Demand remains strong for well-presented properties in Dunedin, however the LVR restrictions are having an impact on the ability for some purchasers to obtain finance, particularly investors, and some clients are reporting that they have to shop around to obtain loans from retail banks.”
“There are many multi-offer situations and unconditional offers are becoming more frequent due to the competitive nature of the market fuelled by the lack of supply”.
Nelson residential property values rose 14.4% year on year with 2.5% growth over the past three months and values are now 42.5% higher than the previous peak of 2007. The average value in the city is now $545,565. Meanwhile values in the Tasman District have risen 13.6% year on year and 0.9% over the past three months and are 34.4% higher than in the previous peak of 2007. The average value in the Tasman district is now $539,866.
QV Nelson, Property Consultant Craig Russell said, “Prices are holding firm for properties across the board despite value growth easing, and the start of Spring has seen the typical increase in properties listed for sale – although only a modest increase.
“Purchasers may be cautious over the coming weeks until the election result becomes clearer.”
“Value levels in Richmond are strong with properties situated close to Richmond Mall and Saxton Fields having strong underlying land values.”
“Entry level lifestyle blocks up to $700,000 are in strong demand particularly those locations close to service townships.”
Values continue to rise strongly across the Hawkes Bay region. Napier values rose 18.4% year on year and 5.2% over the past three months. The average value in the city is now $465,943 and values are now 36.9% above the previous peak of 2007. The Hastings market also continues to see strong value growth rising 17.6% year on year and 2.8% over the past three months and the market is now 38.5% higher than 2007. The average value there is now $431,805. Values in Central Hawkes Bay have risen 1.7% over the past three months and 23.9% in the year since September 2016 as buyers look further out of the main centres for more affordable property.
QV Hawkes Bay Property Consultant Rachael Walker said, “Although values have increased from last year and in the last three months, the market appears to have had some heat lifted, although values are remaining strong across most markets, we understand purchasers may be cautious over the coming weeks until the election result becomes clearer.”
“Although Both Napier and Hastings are experiencing reduced sales volumes; this is the norm over the colder months, and we expect to see the typical spring influx in listings.”
Most areas of the North Island have seen slight value increases over the past three months with the exceptions being of parts the Auckland region many of which have seen slight decreases of up to 2.0% in the last three months. In the past three months the regions seem to have been performing better than the cities particularly Stratford District up 7.5%; South Taranaki up 6.0% and South Wairarapa up 5.8%.
In the South Island, over the past three months values are still performing well in the upper South Island in Tasman, Nelson City, and Kaikoura, and continue to be strong in Mackenzie up 5.7% over the past quarter, and Clutha up 4.8% and there have also been slight increases in the all of the Southland and Otago districts. On the West Coast, Grey and Westland District values have decreased as have values decreased in all of the Canterbury region districts.
Note: Indices based on an aggregation of sub-regions can be can be influenced by a compositional shift in market activity and sub-regions with a larger amount of housing stock will naturally have a more significant influence over the aggregated regional result. As a case in point, a reduction in transactional activity across the Wellington City TA is placing some downwards pressure on the broader Wellington Region index which comprises Porirua, Lower Hutt and Upper Hutt as well as Wellington City. It is important to be mindful of the influence exerted by larger regions when interpreting the results across aggregated regions, particularly during periods of transition. It is recommended using individual TA indices for analysing changes in housing values.