Spring signals a return of positive sentiment
Steady as she goes is the ongoing theme in the New Zealand property market as we enter the first week of spring. We continue to see growth in our regional towns and cities where affordability is less of an issue. In the North Island, Gisborne, Palmerston North and Porirua City have performed well over the last three months and continue to show double digit growth year on year. In the South Island, Dunedin and Invercargill values are up 2.0% and 3.0% respectively in the last quarter. The exception to this is Christchurch where despite a relatively affordable average value of $496,306, the market remains flat owing to a healthy supply keeping pace with demand in the city.
Meanwhile in Auckland and Hamilton, where residential values have declined over recent months, that rate of decline has eased. Central Auckland values have actually grown by 0.1% over the last three months and Hamilton City is also showing some positive growth over the quarter. On the North Shore, the decline in value has slowed from -1.5% last month to -0.6% this month. Whilst the variation in growth is very minor, it signals a return of some positive sentiment as we approach the warmer months.
value nationally has increased 2.3% year on year and is now
$688,760. The average value in the Auckland Region sits at
$1,025,193, down 0.5% over the last quarter.
A full breakdown of the QV House Price Index figures for August 2019 is available by clicking here
Recent market dynamics typical of winter months.
“The recent market dynamics we have experienced such as low listing numbers, low sales volumes and muted value growth are very much typical of the winter months. If homeowners think that they will get the best price for their property in spring/summer, they will wait out the cooler months and be ready to act once the warmer weather arrives" says QV Senior Consultant Paul McCorry.
"Real estate agents have reported increasing competition to list the limited number of properties that come to market each week. This has proved beneficial for vendors with agents willing to negotiate their fee to secure a listing. In Auckland in particular, we are seeing an increasing number of properties listed with an asking price rather than an open-ended auction or tender process - a positive for purchasers.”
“Combined with the seasonal shift is the recent news that the Reserve Bank cut the Official Cash Rate to 1.00% in early August. Now sitting the lowest it has been since they introduced the measure in 1999, this shift is certainly a positive for lenders who can capitalise on special mortgage rates from the major banks as low as 3.65%. Whilst this is good news for the growing number of first homebuyers in the market, it is almost certainly good news for existing homeowners wanting to move house and who will have larger amounts of equity allowing them to access these special rates. This is being borne out in the latest Corelogic Buyer Classification data which despite a decline in recent years, still records ‘movers’ as the most active market group across New Zealand, closely followed by first home buyers and investors.”
“The latter group are showing a resurgence in activity in recent months despite the introduction of the Healthy Homes Bill; perhaps the increase in investor activity is a signal of their more long term approval of announcements earlier in the year regarding no introduction of a comprehensive capital gains tax under this government. Combined with the low cost of lending this will have restored their confidence in the investment market once again. Arguably, the impact of the Healthy Homes Bill is more likely to place upward pressure on rents, impacting tenants more than landlords.”
“The start of September signalled the first week of spring and with it we expect a renewed enthusiasm particularly at the lower end of the market where first home buyers and first time investors will resume their battle for the most affordable property. Supporting this towards the end of spring is the muted possibility of a review to Loan to Value Ratios. This is likely to assist first home buyers more than investors with the former finding raising the deposit more difficult than servicing the mortgage.”
North Shore values dropped 3.4% in the year to July and by 0.6% over the past three months. The average value there is now $1,172,939. The former Auckland City Council central suburbs dropped 2.3% year on year but has increased by 0.1% over the past three months and the average value there is now $1,211,804.
Waitakere values dropped by 1.1% year on year and by 0.1% over the past three months. Manukau values decreased by 1.5% year on year and by 0.9% over the past three months; Papakura values dropped by 1.1% year on year and by 1.7% over the last quarter and the average value there is now $695,577; Franklin values increased by 0.3% year on year and Rodney values were down 1.6% year on year.
Auckland property consultant Hugh Robson notes that the “Auckland residential market remains fairly quiet as we approach the beginning of spring. Despite this, first home buyers continue to buy properties in most suburbs. The number of properties going to auction is down on previous years and more properties are being advertised with an asking price. Homes that have undergone substantial refurbishment are selling well as are properties located close to services such as train routes, motorways and shopping centres.”
“We are also noticing that there is steady re-development taking place in most suburbs as owners and developers realise the potential of their property under the Auckland Unitary Plan. In terms of end products, we are seeing a change from larger family homes on subdivided sites to higher density smaller terraced homes to apartments that are aimed at first home buyers.”
“Although the number of investors is down from the peak, there are still numerous investors out there looking and buying properties that require maintenance or renovation work. The recent lowering of interest rates appears to have caused a slight increase in sales activity in mid to late August so it will be interesting to see whether this trend continues through September and October” says Robson.
Modest value growth has persisted in Tauranga with values increasing by 0.2% over the last quarter. The average value is now $743,202 up 5.4% year on year.
Elsewhere on the east coast the affordable pricing of Gisborne with an average value of $368,735 continues to appeal with values growing 5.6% over the last three months and 15.7% year on year.
Hamilton City home values increased by 0.5% over the past three months and increased by 5.2% in the year to August. The average value in Hamilton is now $588,196.
Jarrod Hedley, QV Senior Consultant notes continued demand. “In Hamilton City there continues to be reasonable demand for residential property, particularly in the $400,000 to $500,000 price bracket where first home buyers are active. In the $600,000 to $700,000 price range, real estate agents are reporting that there is still a lack of good quality listings. Although sales volumes have reduced slightly and there are signs that the market is easing, house value levels have remained relatively static.”
Values across the whole Wellington Region rose 8.3% in the year to August and increased 1.0% over the past quarter and the average value is now $713,798. Porirua has lead the way in recent months with an increase of 4.5% over the quarter and an average value of $620,051.
Compared to the previous few months Wellington has seen more activity, particularly in the Hutt Valley and Porirua areas. David Conford, QV Senior Consultant says “Open homes have been generally well attended with a healthy number of offers being received at both the entry and investor segments of the market. This pickup in activity is likely a result of decreasing interest rates sparking greater interest from first home buyers and investors.”
“Property listings in the region remain constrained and there is more pressure at the entry-level end of the market compared to the mid to upper end where values are presently more stable. Well-presented and well located properties are generally selling well and are receiving multiple offers.”
Nelson residential property values rose 6.7% in the year to August and 0.5% over the past quarter. The average value in the city is now $627,629. Meanwhile, values in the Tasman District have also continued to rise, up 4.1% year on year and 1.0% over the past three months. The average value in the Tasman district is now $608,974.
QV Senior Consultant Craig Russell, said “Properties have been selling readily over the past month with well-located family homes in Stoke and Richmond particularly generating good interest in the $500,000 to $650,000 price bracket. It is typical to see an increase in properties being listed as we come into spring with inventory levels up from this time last year. The number of homes sold also continues to increase with values rising at a modest level. Further growth in the market may yet be fuelled by lower interest rates.”
The Christchurch market remains relatively steady with minimal growth of 0.4% recorded year on year to August 2019 says QV Senior Consultant Kris Rogers. The average value across the city is now $496,306.
“After a relatively long period of subdued value growth, the latest round of interest rate cuts have helped to increase affordability for many purchasers. This has not only kept the first home buyers in the market active, it has enabled those wishing to take the next step up the property ladder the ability to do so.”
“This has resulted in an increased demand on the mid to lower end of the market with agents reporting a shortage of listings within this price bracket.”
“The market also remains active in the Greater Christchurch area satellite towns of Rolleston and Rangiora where the demand for new dwellings is keeping up with the fast growing supply.”
Dunedin residential property values rose 11.9% in the year to August 2019 and by 2.0% in the past three months. The average house value in the city is now $465,457.
QV Dunedin Property Consultant, Tom Patterson, said, “A continued shortage of residential housing stock in the city is putting pressure on the market. Sale prices are often exceeding market expectations, particularly in the lower to medium price bracket. This is resulting in an upward movement of residential values and achievable rents.”
Provincial centres, North Island
Manawatu leads the way in quarterly growth, up 6.2%, followed by Otorohanga (5.7%) and Ruapehe (5.7%). In terms of annual growth, Kawerau leads the way, up 28.5%, followed by Otorohanga (24.9%) and South Waikato (19.9%).
Provincial centres, South Island
Waimate leads the South Island in quarterly growth, up 8.8%, followed by Buller (4.9%) and Dunedin Peninsular and Coastal (3.3%). Southland leads the way in annual growth, up 17.2%, followed by Dunedin South (15.4%) and Invercargill (13.1%).