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Regions continue to see higher value growth

Regions continue to see higher value growth than main centres

The latest monthly QV House Price Index shows nationwide residential property values for April increased 7.6% over the past year, while values rose 1.1% over the past three months. The nationwide average value is now $678,856. When adjusted for inflation the nationwide annual increase drops slightly to 6.4%.

Meanwhile, residential property value growth across the Auckland Region increased slightly by 0.8% year on year although values dropped by 0.3% over the past quarter. The average value for the Auckland Region is now $1,051,687. When adjusted for inflation values dropped 0.3% over the past year.

The full set of QV House Price Index statistics for all New Zealand for April can be downloaded by clicking this link: QV House Price Index April 2018

QV General Manager, David Nagel said, “Nationwide values continue to rise at a moderate pace with many regional centres continuing to see steady increases, while the rate of growth continues to slow, plateau or even drop slightly in the main centres.”

“This is partly due to the continued trend of people seeking a lifestyle change away from the cities and purchasing better valued properties in the regions, particularly those that are within commutable distances of major centres.”

“Values across the Auckland Region and Wellington City have dropped over the past quarter and while annual growth remains positive across both, the Auckland region rose just 0.8% in the year to April.”

“Annual value growth also remains flat in Christchurch, while the Hamilton, Tauranga and Dunedin markets continue to rise moderately.”

“The slowdown in value growth can be partly attributed to the usual seasonal slowdown in activity as we approach the winter months and also the fact that many people, particularly investors, are not expecting significant capital growth in the coming months so are less active in the market.”

“Despite the fact that home values remain high, first home buyer activity is increasing particularly in Wellington and Dunedin – as people take advantage of their KiwiSaver funds as deposits.”

“The higher proportion of first home buyer actively is largely due to rising rents which mean it can often be as affordable to purchase an entry level home and pay a mortgage, as it is to rent a home.”

“However, for many, raising a deposit is still a bridge too far to cross to be able to gain entry into the housing market.”

Values across the Auckland market vary although not significantly. North Shore values rose 3.2% in the year to April 2018 and 0.4% over the past three months. The average value there is now $1,233, 394. The former Auckland City Council central suburbs rose 0.6% year on year and were 0.8% up over the past three months and the average value there is now $1, 086,879. Waitakere values dropped 0.2% year on year but they increased slightly by 0.2% over the past three months. Manukau dropped by 0.3% year on year and 0.4% over the past three months; Papakura values rose 1.1% year on year and 0.1% over the past three months and the average value there is now $701,123; Franklin values also rose 0.2% year on year and Rodney values were also up 0.1% year on year.

QV Auckland Senior Consultant, James Steele said, “Although below peak levels there is still a good amount of activity taking place across Auckland however values remain flat. We are seeing strong interest from first home buyers, who are making the most of a drop in investor activity, and a slight easing of lending criteria and relatively low interest rates.”

“A number of first home buyers are targeting the sub-$600k price bracket in order to obtain the KiwiSaver HomeStart grant but those unwilling to compromise on size or locations are finding these criteria difficult to meet.”

“Listings are staying on the market for a longer period of time and fewer properties are going at auction, providing more opportunity to negotiate and place conditional offers which is benefitting buyers.”

“As buyers can be more selective under these ‘regular’ market conditions we are seeing the importance of presentation and an effective marketing campaign comes back into play for vendors.”

“A mixture of strong and weak sales is common with the low side often represented by some urgency on the part of the vendor to sell.”

Hamilton City home values rose 1.7% over the past three months and values increased 2.9% in the year to April. The average value in Hamilton is now $554,452.

QV Hamilton Property Consultant Andrew Jaques said, “Overall, it’s a steady market. Sales numbers are particularly high in the northern suburbs in areas such as Flagstaff and Rototuna.”

“The eastern and western parts of the Hamilton market also remain busy with plenty of activity and demand.”

“However, it continues to be a seller’s market, with buyer competition intense. The preferred method of sale is still through a negotiated price although properties with strong character and in sought after locations are being called to auction.”

“Investor activity appears to be dropping, due to a lack of desire to expand portfolios and some are selling up which is creating opportunities for first home buyers.”

Tauranga home values rose 3.8% year on year and 0.8% over the past three months. The average value in the city is $704,183. The Western Bay of Plenty market rose 6.8% year on year and 2.2% over the past three months. The average value in the district is now $630,703.

QV Tauranga Property Consultant, Steven Dunn said, “Tauranga continues to see good interest especially for those looking to purchase in the higher price bracket as well as from first home buyers.”

“However across the board values appear to have stabilised and we continue to see buyers are taking longer to complete due diligence before purchasing.”

“There is still a shortage of listings in Mount Maunganui especially at the top end of the market and for properties in the mid to low price bracket there are a good number of listings with plenty of buyers.”

“In the Western Bay of Plenty regions such as Katikati and Te Puke, values have stabilised with sales numbers still steady and vendors with realistic expectations selling well but some finding they need to adjust their price expectations.”

Values across the whole Wellington Region rose 6.6% in the year to April although dropped 0.3% over the past quarter and the average value is now $642,156.

Wellington City values increased 5.1% year on year but dropped 0.4% over the past three months and the average value there is now $761,400. Meanwhile, values in Upper Hutt rose 9.3% year on year and 3.5% over the past three months; Lower Hutt rose 6.8% year on year and 2.7% over the past quarter; Porirua rose 7.3% year on year and dropped 0.2% over the past quarter. Finally, the Kapiti Coast rose 13.4% year on year and 2.2% over the past three months.

QV Wellington Senior Consultant, David Cornford said, “Market conditions in Wellington are pretty stable with modest value growth.”

“The number of days to sell has increased slightly but is still significantly lower than the long term average and overall the market is robust.”

“Given the tight supply in Wellington it continues to be a sellers’ market and buyer competition for listings continues to drive values up particularly at the lower to mid end of the market.”

“A yet to be constructed development which will be known as “Paetutu” comprising two and three bedroom townhouses in Petone all but sold out in a week (51 of the 56 offered). These off the plan properties sold before the official marketing launch and before formal marketing commenced with most of the buyers learning of the development through The Professionals mailing list.”

“The townhouses are priced in the mid $500,000’s and it highlights the strong demand for affordable housing in Wellington, we understand the majority were sold to owner occupiers.”

“First home buyers are motivated to purchase with both rising rental costs and access to their KiwiSaver funds for deposits. We continue to see strong demand in this segment of the market”

“Although the “student surge” into Wellington has now settled the rental market remains very tight and there has been a significant uplift in rent levels over the last 12 months, particularly in Lower Hutt.”

Christchurch city values continue recent trends, either remaining flat or seeing slight increases or decreases in value. Values dropped slightly by 0.5% year on year and by 0.2% over the past three months. The average value in the city is now $493,346.

QV Christchurch Property Consultant Hamish Collins said, “The market remains steady in terms of value growth.”

“Well-maintained property continues to sell well although this is often dependant on the seller being willing to negotiate on price.”

“We are observing that discounts are being offered on a good portion of properties that are sold although these discounts are not overly substantial.”

“This reflects on the fact that the data is showing only slight decreases across the Christchurch market of less than 1.0%.”

Values in Dunedin continue their upward trend having increased 8.8% in the year to April and 3.1% over the past three months. The average value in the city is 404,539. Dunedin – South saw the strongest growth with values up 9.8% year on year and 3.6% over the last quarter. The average value there is now $386,807.

QV Dunedin Property Consultant, Aidan Young said, “The market has slowed but values remain stable overall and there appears to be a bit of a mixed sentiment.”

“The amount of people attending open homes has dropped although there is still plenty of activity from first home buyers who are snapping up well-maintained, entry level properties up to the $400,000 HomeStart grant cap.”

“Dunedin continues to provide a lower entry point when compared to many other parts of New Zealand.”
“Internal migration between southern districts including Clutha, Central Otago and Southland has been noted as people seek the best value properties.”

“Vacant land remains in short supply given that some of the larger subdivisions are nearing their final stages, particularly in Mosgiel. There is more supply in the pipeline, however there may be some time until titles are available and purchasers are able to build.”

“Anecdotal evidence suggests some of the higher value residential vacant sections particularly around $300,000 are being met with some resistance by the market.

“I would anticipate growth will remain relatively stable over the coming months as we enter the winter slowdown period, typical of Dunedin.”

Nelson residential property values rose 6.7% in the year to April and 0.8% over the last quarter. The average value in the city is now $562,832. Meanwhile values in the Tasman District have also continued to rise, up 8.5% year on year and 0.9% over the past three months. The average value in the Tasman district is now $565,906.

QV Nelson Property Consultant Craig Russell said, “Overall value growth has plateaued over the past few months. The majority of upward pressure in the market is still however coming from the entry level properties with first home buyers active in the marketplace.”

“Vendor expectations in some cases have risen faster than the market which has a resulted in some properties sitting on the market for an extended period followed by a price drop.”

“The lack of availability of land for sale continues to underpin strong section prices which have also coincided with an increase in in-fill developments.”

“There has been a number of executive quality residential homes sell in Nelson in 2018 predominantly located on the Port Hills and in Atawhai being hill suburbs with excellent coastal views.”

Hawkes Bay
The Hawkes Bay region continues to see significant value growth. Napier values rose 17.6% year on year and 3.4% over the past three months. The average value in the city is now $500,347. Hastings values are also continuing to rise up 12.5% year on year and 1.3% over the past three months. The average value there is now $459,406. The Central Hawkes Bay has also seen values rise 19.8% year on year and 2.7% over the past three months and the average value there is now $315,767.

QV Hawkes Bay Property Consultant Nicola Waldon said, Activity has picked up over the past month which can be partly attributed to vendors aiming to take advantage of the fact they can achieve high sales prices in the current market and before any possible slowdown in strong value growth seen over the past couple of years.

“There’s a general sense of people asking the question of how long can the high rate of growth in residential property values continue.”

“We’ve seen a slight increase in the number of listings coming to the market although there’s still not enough stock to keep up with demand particularly in popular parts of Napier and Havelock North.”

“The Hastings market is also busy, with a high number of sales going to first home buyers under $400,000. These buyers are able to take advantage of the Welcome Home Loan Scheme and, in many cases, their KiwiSaver contributions which can be used to make up part of their deposit.”

“We are continuing to see a high proportion of out-of-town buyers, who are in the process of moving to the Hawkes Bay. Rents remain relatively high due to a shortage of supply and with low interest rates buying appears to be the preferred option for those who can gain finance to do so.”

“The strong demand means more competition and buyers are having to negotiate and do their due diligence quickly to ensure they don’t miss out on properties. This demand is also continuing to drive values up across all areas of the market.”

Provincial centres
In the North Island, the growth continues across many regional centres. South Wairarapa experienced the greatest value growth over the past year, up 23% while Wairoa experienced the highest rate of growth over the past quarter, up 8.6%. Growth remains strong in the Hawkes Bay region, with Napier and Hastings continuing to appeal for many out-of-town buyers.

In the South Island, Waitaki saw the greatest annual value increase, up 13.8%, while Gore experienced the highest quarterly increase in the regions, up 4.2%. Most notably, Mackenzie dropped in value over the past quarter, down 4.5% although still up by 12.1% over the past year. The deep South continues to see consistent value increases across most regions, particularly Invercargill and across Central Otago.

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