Late spring surge as we head into summer
Wednesday 6 November 2019.
The continued shortage of quality real estate listings, coupled with record low mortgage interest rates have combined to add some zing to the property market over October.
Spring normally brings with it a surge in house listings, but listings are generally down throughout New Zealand. With lower interest rates enabling new buyers to enter the market, competition for limited stock has contributed to the October results.
The average value nationally has increased 2.8% year on year and is now $697,204. This represents an increase of 1.4% over the past 3 months. The average value in Auckland Region sits at $1,031,447, down 1.5% from 12 months ago but up 0.6% over the last three months.
QV General Manager David Nagel said “The residential markets of all our main cities have shown value growth over the past three months, with this largely attributed to the recent reduction in interest rates by the major banks.”
“Even the markets which have struggled over the past few months, such as Auckland and Christchurch, are showing a resurgence in prices achieved,” he says.
“The key property market drivers have remained strong over the past few years with low interest rates, a positive economic sentiment as well as net migration continuing to fuel housing demand. Countering these positive drivers are affordability challenges, where the price of housing in a number of locations has increased to a level many New Zealanders simply cannot afford,” says Mr Nagel.
The predicted loosening of LVR restrictions by the RBNZ in November could attract further new players into the property market when coupled with reduced interest rates helping to bridge the affordability gap.
A full breakdown of the QV House Price Index figures for October 2019 is available by clicking here
All eyes will be on the RBNZ's November announcement
Some of the better provincial performers include Otorohanga and Stratford Districts where residential values have increased 33.6% and 19.8% respectively over the past 12 months. Hastings District has also experienced strong growth with values increasing 18.7% in the 12 months to October while Manawatu District values have increased 18.0% over the same period.
In the South Island the star property performers were Southland District with annual growth of 15.1% while Dunedin’s star continues to shine with an annual value increase of 14.7% to October.
“As we head towards summer, all eyes will be on the RBNZ to see what happens with LVR’s in their November announcements. With many economists also predicting further cuts to the OCR in November, the property market could be in for a late spring surge as we head into summer.”
North Shore values dropped 2.2% in the year to October but grew by 1.5% over the last three months. The average value is now $1,189,357. The former Auckland City Council central suburbs dropped 1.2% year on year but increased by 0.5% over the previous three months and their average value is now $1,216,417.
The Auckland residential market has seen a more positive sentiment coming through as we enter the summer months. An increase in activity has been noted throughout the region and limited listing numbers have led to a slight resurgence in values although the market is still in a marginally weaker position overall than this time last year. It is expected that with the current low interest rate environment and summer approaching, there will be a moderate increase in the sales volumes throughout the region.
In South and West Auckland, first home buyers are making the most of the relatively flat market and this has led to some minor value growth over the spring months. Investors have also been featuring slightly more often although well below the previous high levels of a couple of years ago. The low interest rate levels are expected to keep this sector of the market buoyant despite the stricter rules and regulations for landlords implemented in recent times. Greenfield developments are still suffering from large supply numbers in the Southern areas with buyers having a wide range of options for their new build. Established suburbs in the inner West have been noted as seeing good enquiry from buyers, with anecdotal evidence suggesting there has been increasing open-home attendance levels although this hasn’t led to much in the way of value growth.
The North Shore has also seen an increase in activity and some modest value growth has been noted over the past three months.
The average value for Hamilton City continues to hold with only 0.3% increase since last month, up to $592,125.
In the regional areas
“demand continues to outweigh supply with agents reporting
of a lack of good quality listings available for active
purchasers, particularly in the low to mid-range price
bracket of each locality” says QV Senior Consultant Jarrod
Strong development and activity to the north of the Waipa District has meant that Cambridge continues to grow closer to Hamilton in price, with the average value nudging $600,000 at $599,687 for the whole district.
Values across the whole Wellington Region rose 6.4% in the year to October and increased 2.4% over the past quarter. The average value is now $730,019. Over the last three months, the region’s modest growth saw Lower Hutt record the highest rate of quarterly growth at 5.4%.
Upper Hutt has seen the strongest annual growth at 15.2%, followed by Lower Hutt at 9.8%, Porirua at 8.5% and then Wellington City trailing on 3.6%.
QV Senior Consultant David Cornford says there is a shortage of property on the market in the Wellington region. “The tight supply combined with the relatively strong local economy, and record low interest rates is resulting in continued upwards pressure on prices.”
Well-presented properties in desirable locations are attracting strong levels of interest and are selling well.
First home buyers remain active and investors have showed renewed interest over the last few months, a result of lower interest rates and the possibility of higher returns due to the strong rental market in Wellington.
Nelson / Tasman
Nelson residential property values rose 7.1% in the year to October and 1.5% over the past quarter. The average value in the city is now $632,690. Meanwhile, values in the Tasman District have also continued to rise, up 7.1% year on year and 1.5% over the past three months. The average value in the Tasman district is now $632,690.
The local property market was active during October with modest to moderate house price increases says QV Senior Consultant Craig Russell. He notes an increase in properties being listed for sale particularly in Nelson.
Low interest rates continue to be a key driver with increased market confidence helping purchasers to commit to property decisions.
Nelson South, Toi Toi and Washington Valley continue to attract first home buyers, families and investors with properties in these locations being considered entry level for Nelson and typically selling in the $350,000 to $550,000 price bracket.
The Christchurch property market remains relatively stable with a modest increase year on year of 1.4% and 1.5% over the last quarter. The average value is $499,840.
The majority of Christchurch’s overall growth can be attributed to properties in the low to medium value range with greater increases recorded in the Eastern and South-western areas of the city.
Demand remains strong for well presented properties in desirable localities close to amenities and the city centre says QV Senior Consultant Kris Rogers.
The Waimakariri and Selwyn districts also remain stable with modest growth year on year of 1.6% and 0.6% respectively.
Dunedin residential property values rose 14.7% in the year to October 2019 and by 6.0% in the past three months. The average house value in the city is now $486,395.
QV Dunedin Property Consultant, Tom Patterson, says, “High demand and low supply for residential property in Dunedin City continue to support strong month to month growth across all main areas.”
The Peninsula and Coastal area experienced the highest level of growth with an average house price of $449,421; a 7.0% increased over three months and 16.0% increase over 12 months. This growth puts Dunedin City among the fastest growing regions in New Zealand and remains an attractive market for investors while bringing high competition for first home buyers.
Provincial centres, North Island
In the North Island, Stratford leads the way in quarterly growth, up 6.8%, followed by Carterton 5.7% and Taupo 5.6%. Otorohanga leads annual growth, up 33.6%, followed by Stratford, 19.8% and Hastings 18.7%.
Provincial centres, South Island
Dunedin led the way for quarterly South Island growth with Peninsular and Coastal at 7.0%, Dunedin Central and North with 6.6% and Dunedin South with 5.7%. Dunedin Peninsular and Coastal also leads the way in annual growth, up 16%, followed by Southland 15.1% and Dunedin Taieri 14.7%.