Nationwide value growth being driven by regions as Auckland market rises at slowest annual rate in five years
The latest monthly QV House Price Index shows nationwide residential property values for July increased 6.4% over the past year which is the slowest annual rate since February 2015. Values rose by 1.6% over the past three months and the nationwide average value is now $641,280 which is 54.8% above the previous market peak of late 2007. When adjusted for inflation the nationwide annual increase drops slightly to 4.6% and values are now 29.2% above the 2007 peak.
Residential property values across the Auckland Region increased 5.3% year on year which is the slowest annual rate of growth seen since May 2012. Quarterly value growth has plateaued for the second month in a row at 0.0% over the past three months. The average value for the Auckland Region is now $1,044,303 and values are now on average 91.1% higher than the previous peak of 2007. When adjusted for inflation values rose 3.4% over the past year and are 59.5% above the 2007 peak.
The full set of QV House Price Index statistics for all New Zealand for July can be downloaded by clicking here: QV House Price Index for July 2017.
QV National Spokesperson Andrea Rush said, “The latest QV House Price Index figures show nationwide values are still rising, but this growth is now being driven by regional and provincial centres rather than the largest cities.”
“Values continue to plateau in Auckland, Hamilton and Christchurch in a trend seen since October last year when the latest round of LVR restrictions were introduced.”
“Wellington and Dunedin are now also experiencing a similar trend with quarterly value growth in both cities slowing to below 1.0%.”
“Much of the slowdown in the markets is being caused by high prices and banks stricter lending criteria meaning it’s difficult for many buyers to raise finance to purchase and this is now constraining the market.”
“Record high net migration continues yet building consents are now trending downwards so the underlying demand and lack of supply for homes remains in the market, particularly in Auckland.”
“It’s likely that these trends will continue for the rest of the winter and many buyers and sellers are now taking a wait and see approach until after winter and the election.”
Values are rising in some parts of Auckland and dropping in others. Waiheke Island saw the strongest rise with values up 4.1% over the past three months and values also rose slightly in Auckland City suburbs up 0.9%; and on the North Shore up 0.6%; while values decreased the most in Papakura where they dropped 2.6%; they were also down 1.6% in Franklin; 0.7% in Rodney, 0.9% in Waitakere and 0.5% in Manukau over the past quarter.
QV Auckland Registered Valuers, James Steele said, “The Auckland residential property market is still cooling, with sales volumes down more than 30% below the same period last year while there are twice as many properties listed on the market as there were this time last year.”
“This is meaning properties are generally taking longer to sell and auction clearance rates also remain low, but auction rooms are still well attended so it appears people remain very interested in what the market is doing.”
“We are also still seeing well-presented properties in sought after locations sell well to owner occupiers but in other areas that were favoured by investors we are now seeing a reduction in prices where speculation was previously a strong part of the market.”
“Some sellers however are choosing to withdraw their properties from sale if they are not receiving price offers that meet their expectations.”
“For many there doesn’t seem to be a mass urgency to sell so while it’s become much more of a buyers’ market with more choice, less competition, and a better chance of getting a good deal compared to 2016, sellers still retain some power while interest rates are low and the economy remains buoyant”
Hamilton City home values rose 0.4% over the past three months and 5.4% year on year. Values are now 49.6% higher than the previous peak of 2007. The average value in the Hamilton is now $540,840.
QV Hamilton Valuer, Stephen Hare said, “The Hamilton city market has remained stagnant over the past month and the average time properties are taking to sell has lengthened which is giving buyers more opportunities to negotiate.”
“With the heat now having come out of the market, listing numbers have increased and clearance rates have fallen at auctions, however well-presented and well-located properties continue to sell over asking prices and with buyer competition.”
“The drop-off in the number of investment buyers has created opportunities for first home buyers, who were previously getting beaten when vying for properties.
“Values in the wider Waikato District have plateaued over the past three months with places like Huntly, Ngaruawahia and Pokeno not experiencing the same buyer demand or corresponding sales volumes that they were 12 months ago.”
‘In Pokeno, building companies are not achieving the same sales prices they were for new homes which were selling for between $770k and 780k and are now selling for around $50,000 less.”
“This drop in the sales price is partly due to some buyers not being able to gain finance to purchase since the banks have tightened up their lending criteria.”
“In the Hauraki District, there’s still demand for entry level properties under $500K, particularly in small towns such as Ngatea within commuting distance of Hamilton and Auckland. This demand has seen values jump 12.5% in the Hauraki District over the past quarter and 28.8% year on year.”
Tauranga home values continue to rise up by 12.3% year on year and 1.9% over the past three months. Values there are now 43.6% higher than the previous peak of 2007. The average value in the city is $691,350. Western Bay of Plenty increased by 14.4% year on year and 4.6% over the past three months. The average value in the district is now $617,754.
QV Tauranga, Registered Valuer, David Hume said, “The market in Tauranga and Western Bay of Plenty is steady at present, with most agents reporting more normalised levels in demand.”
“Demand is still strong at the higher end of the market with continued enquiry from Auckland buyers particularly for residential property in Mount Maunganui.”
“Clearance rates at auctions are down on this time last year although a lot of conditional deals are being done post auction often due to buyers who need to sell a property before they purchase struggling to obtain bridging finance from banks.”
“Rents in Tauranga have stabilised for the first time in two years at an average of $475 per week.”
“The Western Bay of Plenty continues to see good growth, partly caused by reduced section sizes in new developments, continuing to make lifestyle blocks more appealing to families.”
The QV House Price Index shows values in the Wellington region continued to slow rising just 0.8% over the past three months. Values increased 15.8% year on year down from annual growth of 18.0% last month and they are now 33.2% higher than in the previous peak of 2007. The average value across the wider region has now ticked over $600,000 and is $607,011. Values dropped in Wellington-North by 0.5% and Wellington-West by 0.6% over the past quarter.
QV Wellington Registered Valuer, David Cornford said, “The Wellington market continues to slow and residential property values have largely flattened over the last two months.”
“Sale numbers are down compared to 12 months ago and this confirms there is less activity from both vendors and buyers.”
“Both buyers and sellers seem to be taking a wait and see approach and this will likely continue until after the election and the spring months are upon us.”
New builds and off plan purchasers are selling well, as these are not impacted by the LVR restrictions introduced last year.
“Stock levels in Wellington are very low, with approximately only six weeks of supply left on the market and it’s possible this is due to winter not being a favoured time to list properties for sale. A tightening of supply along with a decrease in demand has resulted in a relatively stable market in Wellington”
“Well-presented properties in popular localities are continuing to sell well and are achieving strong prices.”
Christchurch City values continue to plateau rising just 0.6% year on year and they decreased slightly by 0.2% over the past three months. Values in the city are now 30.5% higher than the previous peak of 2007.
QV Christchurch Registered Valuer Daryl Taggart said, “The Christchurch market is stalling, there doesn’t seem to be a lot of activity and properties are increasingly harder to sell.”
“Finance is now the biggest hurdle for most buyers, especially for those that already own property, and where a condition of the new purchase will be the sale of another property.”
“We are seeing a number of cases where asking prices have been reduced to achieve a sale, especially those who require a quick sale.”
“Now that the market is slow it’s likely that increasingly vendors may find they need to reduce their price expectations to achieve a sale.”
“Rents are also decreasing which suggests there is an oversupply of rental property on the market.”
“It’s possible that this slow-down in the market is just the traditional winter slowdown so it will be interesting to see what happens once the election is over and spring is here to see if things pick up.”
Dunedin residential property values continue to rise but at a slower rate than earlier in the year with quarterly growth slowing to 0.6% over the past three months. Values rose by 12.6% in the year since July 2016 and are now 30.6% above the previous peak of 2007. The average value in the city is now $373,857. Values rose the most over the past quarter in Dunedin Taieri where they increased by 2.1% while values in Dunedin-Peninsula Coastal areas dropped by 2.7% over the same period.
QV Dunedin Registered Valuer, Aidan Young said, “Demand for residential property in Dunedin remains strong and there are very low listing levels but the rate of value growth has slowed over the winter months.”
“Multi-offer scenarios are still common, as purchasers are keen to secure properties and we are continuing to see good sale prices being achieved with many properties selling for more than the asking price.”
“Buyers do prefer well presented, modernised, low maintenance properties and these properties are selling quickly and achieving good prices.”
“First home buyers are now more active in nearby regional centres following recent value growth in Dunedin city in particular in places like Milton and Balclutha where entry level property is more affordable.”
Nelson residential property values rose 14.4% year on year but quarterly growth slowed to 0.8% over the past three months and values are now 38.8% higher than the previous peak of 2007. The average value in the city is now $531,659. Meanwhile values in the Tasman District have risen 16.7% year on year and 2.3% over the past three months and are 32.9% higher than in the previous peak of 2007. The average value in the district is now $533,816.
QV Nelson, Registered Valuer Craig Russell said, “The Nelson market remains robust however value growth has plateaued over the past month.”
“Open homes are attracting fewer numbers which are leading to less multiple offers and due diligence clauses are returning to sale and purchase agreements as market demand slows.”
“However, we are still seeing strong interest from out of town buyers, and in particular Auckland buyers who are either cashed up, have good job prospects in the area or can work remotely, and also those people who just see Nelson as a desirable place to live.”
Values continue to rise strongly across the Hawkes Bay region. Napier values rose 18.4% year on year and 5.7% over the past three months. The average value in the city is now $449,717 and values are now 32.2% above the previous peak of 2007. The Hastings market also continues to see strong value growth rising 20.0% year on year and 3.7% over the past three months and the market is now 36.0% higher than 2007. The average value there is now $423,750. Values Central Hawkes Bay have jumped 8.7% over the past three months and 22.7% in the year since July 2016.
QV Hawkes Bay, Registered Valuer Michelle Drinkrow said, “The Hawkes Bay residential property market is still showing steady levels of activity and demand.
Well-presented properties are continuing to sell well but in some instances buyers aren’t rushing to complete the sale like they were a few months ago.
The latest round of LVR changes appears to have had a minor impact on some buyers but cash investors or those with high levels of equity remain active. We are also continuing to see out of town buyers moving to the area to live in search of more affordable housing.
Residential vacant land in both Napier and Hastings remains in high demand with good sales levels being seen.
We are noticing a limited number in listings available which could be in part due to the annual winter slow-down which traditionally occurs in the Hawkes Bay property market and also through buyers taking a wait and see approach until after the election.
Most provincial areas of the North Island continue to see relatively strong value growth as buyers look outside of the main centres for more affordable property. Some of the strongest value growth has been seen in the Kaipara and Whangarei Districts North of Auckland; the Hauraki, South Waikato and Waitomo Districts near Hamilton and in Masterton; South Wairarapa and Carterton near Wellington. Values dropped in the Tararua, Ruapehu and South Taranaki Districts.
In the South Island, the Queenstown market has begun rising again after a period of relatively flat growth up 4.9% over the past three months which may be driven by strong value growth at the top end of the market there. The average value there has now topped that of the Auckland Region at $1,092,748. Nearby Central Otago has also seen values rise 4.8% over the same period and values continue to rise in nearby MacKenzie and Clutha districts. Values in Westland are also rising up 4.5% over the past three months and 10.0% year on year while values continue to decrease in other parts of the Westcoast in the Buller and Grey Districts. Values also dropped in Kaikoura, Ashburton and Waimate.
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