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QV Media Release: Values hold firm despite drop in sales

07 Jun 2018

Media Release 

7 June 2018

The latest monthly QV House Price Index shows nationwide residential property values for May increased 6.9% over the past year, while values rose 0.8% over the past three months. The nationwide average value is now $677,996. When adjusted for inflation, the nationwide annual increase drops slightly to 5.8%.   

Meanwhile, residential property value growth across the Auckland Region increased slightly by 1.0% year on year and by 0.1% over the past quarter. The average value for the Auckland Region is now $1,054,729.  When adjusted for inflation, values dropped 0.1% over the past year.  

For a full breakdown of the QV House Price Index figures for May, please click here

QV General Manager, David Nagel said, “As anticipated, nationwide sales volumes are down as we enter the usual winter slowdown although value levels are holding. This is typical of this time of year, as many people put off selling their property until the warmer months. Values remain relatively high, as low interest rates, the loosening of the LVR restrictions and the government kick-start packages, such as the KiwiSaver HomeStart grant and savings withdrawal, continue to fuel demand.” 

“Quarterly value growth across the Auckland and Wellington region has come virtually to a standstill. With a lower expectation of capital gains, particularly in Auckland, we’re seeing people show less urgency when it comes to selling or buying property." 

"Dunedin is the only main centre to buck the trend, where entry-level prices remain comparatively low and well-located properties continue to demand high prices. Values growth across the other regional centres of Hamilton, Tauranga and Christchurch remains flat.”

“We’re still seeing growth in regional NZ where values levels were initially slower to take off.   But even these provincial towns are showing signs that the growth we’ve observed in the past few quarters will be difficult to maintain.”

“First Home Buyer activity continues to grow across the country, having been on the up for the past few years. This is particularly evident in the wider Wellington region, where the Hutt Valley and Porirua City are seeing high numbers of buyers in this category.”

“With interest rates due to remain stable coupled with increasing costs faced by investors, I would anticipate the current trends will remain mostly the same over the coming months and vendors will need to put extra focus on marketing their property effectively in a tighter market.”

Auckland

Value growth remains slow across Auckland's suburbs. North Shore values rose 2.6% in the year to May 2018 although they dropped 0.2% over the past three months. The average value there is now $1,229,088.

The former Auckland City Council central suburbs rose 1.9% year on year and were 0.5% up over the past three months and the average value there is now $1,245,086. Waitakere values stayed flat year on year but they increased slightly by 0.1% over the past three months. Manukau dropped by 0.2% year on year and 0.3% over the past three months; Papakura values rose 2.7% year on year although they stayed the same over the past three months and the average value there is now $702,157; Franklin values dropped  0.5% year on year and Rodney values were also down 0.1% year on year. 

QV Auckland Senior Consultant, James Steele said, “Value growth continues to remain flat largely due to a lower expectation of capital growth and stricter lending conditions which is impacting investor activity.”

“With values flat-lining for some period now, we’re seeing vendor expectations adjust. In the current market, sellers really have to put in extra effort to get a property sold quickly, with an increasing focus on marketing and presenting a property effectively. In this sense, it’s a shift towards a buyer’s market where properties are tending to sell through negotiation as opposed to auction. A condition to this is, until we see pressure on property owners from rising interest rates or a change in economic conditions, sellers retain some power in the market”.    

“Some of Auckland’s larger scale new builds which are outside of an entry-level price bracket are taking longer to sell and in some cases, discounts are being offered. Interestingly, despite the significant amount of infill construction taking place, demand is also softening for development land largely due to limited availability of finance." 

“In saying this, demand for well-presented entry-level properties remains strong – with properties being snapped up quickly at the right price. Although first Home Buyers are accounting for a growing proportion of buyers in this segment and as they take advantage of less competition from investors, price levels mean that buying a home is still unattainable for many.”

Hamilton  

Hamilton City home values rose 1.0% over the past three months and values increased 3.1% in the year to May. The average value in Hamilton is now $553,873.

QV Hamilton Property Consultant Andrew Jaques said, “Net migration into Hamilton - which has been increasing since early 2014 – continues to fuel demand for housing right across the region. This is leading to steady value growth although interestingly sales volumes are down in all suburbs except Peacocke, Frankton and Dinsdale North. The demand in these areas appears to be primarily coming from first home buyers due to the relatively affordable house and land package options on offer ranging from two-bedroom through to larger, four-bedroom dwellings.”

“We’re also observing a drop in the amount of residential freehold sections and units being titled, down 51% when compared to this time last year. This is partly due to an overall gradual decrease in demand throughout Hamilton."

Tauranga

Tauranga home values rose 2.6% year on year although they dropped 0.9% over the past three months. The average value in the city is $700,744. The Western Bay of Plenty market rose 5.2% year on year and 1.8% over the past three months. The average value in the district is now $633,569.

Tauranga Property Consultant, Steven Dunn said, “We are starting to see the market start slow down although premium properties still remain in high demand, as out of town buyers from Auckland seek a change in lifestyle. There does appear to be a shortage of listings for mid-range properties, which is a sign that people are holding off selling until after winter." 

“We’re also seeing buyers take their time when searching for a property and, in many situations, showing less willingness to negotiate on price during negotiations. Interestingly, we have noticed a good portion of sales take place post auction."

“First Home Buyers, particularly those priced out of the Auckland market, remain active in the market. As the local economy continues to diversify, job prospects and business opportunities also improve which appeal to many who seek their first step onto the property ladder.”

“The Western Bay of Plenty region is also benefiting from a strong local economy, which is driving steady value growth. KatiKati and TePuke, in particular, is enjoying the benefits coming from a productive Kiwifruit trade.”        

Wellington   

Values across the whole Wellington Region rose 4.3% in the year to May although dropped 1.1% over the past quarter and the average value is now $633,759.

Wellington City values increased 3.8% year on year but dropped 1.2% over the past three months and the average value there is now $754,924. Meanwhile, values in Upper Hutt rose 8.6% year on year and 2.9% over the past three months; Lower Hutt rose 5.6% year on year and 1.4% over the past quarter; Porirua rose 8.3% year on year and increased by 0.9% over the past quarter. Finally, the Kapiti Coast rose 11.1% year on year and 1.9% over the past three months.

QV Wellington Senior Consultant, David Cornford said, “It’s very much a continuation of recent themes, with Porirua, and the Hutt Valley showing modest value growth resulting from low levels of supply and steady demand particularly from First Home Buyers. Values in Wellington City are relatively stable and well-maintained properties in desirable locations continue to see multiple offers and strong sale prices.”

“Demand remains high for the region’s low-to-mid value suburbs – in particular Wainuiomata, Stokes Valley and Taita in the Hutt; Ranui, Cannons Creek in Porirua, and, finally, Pinehaven, Totara Park and Wallaceville in Upper Hutt. These suburbs are particularly popular with First Home Buyers due to their relative affordability and also to investors as they offer higher yields compared to more central or higher value suburbs.”

“At the same time, an expanding workforce, changing lifestyle expectations and high property values also mean that one or two bedroom apartments in inner city suburbs remain popular.” 

“As we enter the winter months, we are seeing signs of the usual seasonal slowdown although people shouldn’t necessarily be discouraged from selling their property at this time. Properties sold in winter often face less competition, as people can perceive it as a bad time to list. The main exception to this is if your property doesn’t receive much sunlight, in which case you might be best holding off until the warmer months.”

“Recent market events will influence investor activity. The government’s report on meth testing – which concluded that meth testing is not warranted in most cases – will largely put an end to investor fears of facing partial or complete demolition of their properties although this could be offset by the much talked about ring-fencing of tax losses.”

“The recent sale of one of Wellington’s largest blocks of land, Plimmerton Farm, will help ease future supply issues. The development, a 389 hectare site north of Porirua, contains upwards of 1500 sections and 60 lifestyle blocks. Some of these are expected to enter the market in late 2020 after the completion of Transmission Gully and the development is estimated take around 20 years to fully complete.” 

Christchurch 

Christchurch city values continue recent trends, either remaining flat or seeing slight increases or decreases in value. Values remained flat year on year and increased slightly by 0.1% over the past three months. The average value in the city is now $495,148.

QV Christchurch Property Consultant Hamish Collins said, “It’s a steady market, with sales volumes up year on year although value growth either slightly down or flat across most suburbs. With value growth remaining fairly flat, vendor expectations are changing.” 

“It’s certainly a buyers’ market, with ample supply enabling people to be selective, take their time and do their due diligence before purchasing. This, coupled with the challenging task agents face managing vendor expectations around sales prices, is increasing the average days to sell a property which is currently sitting at approximately 42 days”

“At the same time, good quality homes that are well-located continue to sell well, sometimes obtaining values beyond vendor expectations. At the other end of the spectrum, poorly maintained or badly located properties are selling very slowly.”

“We’re also seeing reduced investor activity due to banks tighter lending criteria however from speaking with the banks, there are more lending opportunities available compared to this time last year which is creating new opportunities if serviceability requirements can be met; which are tighter than this time a year ago. Finally, we’re also seeing Developers offer discounts on sales prices as a way to free up capital for their next development they have generally already committed to.”     

Dunedin

Values in Dunedin continue their upward trend having increased 9.4% in the year to May and 4.0% over the past three months. The average value in the city is $408,827. Dunedin – South saw the strongest growth with values up 10.3% year on year and 4.5% over the last quarter. The average value there is now $390,162.

QV Dunedin Property Consultant, Aidan Young said, “The market is robust – with both entry-level properties and premium properties selling reasonably quickly provided they are priced right. Multi-offer scenarios are common-place, which gives us an indication of how busy the market is."

"The council’s commitment to investing in local amenities such as a hospital and a pedestrian bridge to the waterfront is further enhancing the public confidence in the local community, which can only be positive in terms of future growth.”

“The city’s premium suburbs within close proximity to the CBD or the beach – such as Maori Hill or St Clair – continue to attract demand and high values."

"We’re also seeing entry-level properties, which offer comparatively low values below $300,000, continue to sell quickly particularly in suburbs such as Caversham, South Dunedin, and Waikouaiti settlement.”

“As we approach the usual winter slowdown period, I’d anticipate that the amount of property listings will drop although, with demand showing no signs of dropping significantly, values should still steadily grow or at least hold their value.”

Nelson

Nelson residential property values rose 6.2% in the year to May but dropped 1.3% over the last quarter. The average value in the city is now $560,473.  Meanwhile values in the Tasman District have also continued to rise, up 6.4% year on year and 0.6% over the past three months. The average value in the Tasman district is now $569,064.

QV Nelson Property Consultant Craig Russell said, “It’s a more balanced market compared with this time last year, with a growing portion of First Home Buyers entering the market, sales activity easing and modest value growth."

"We’re continuing to see good quality, well-located properties sell quickly particularly in areas close to good schooling and amenities such as Richmond mall, Saxton Sports Complex and Nelson City shopping precinct." 

"Investor activity has dropped, as changes in government policy such as Kiwisaver entitlements for first home buyers, Insulation requirements, LVR restrictions and possible ring fencing."

“I would anticipate sales activity to remain fairly quiet over the winter months which is traditionally a subdued period of the year as people hold of selling until the warmer months."

Hawkes Bay

Napier values rose 16.3% year on year and 3.9% over the past three months. The average value in the city is now $507,441. Hastings values are also continuing to rise up 10.7% year on year and 1.4% over the past three months. The average value there is now $458,077. The Central Hawkes Bay has also seen values rise 16.2% year on year but decreased 2.3% over the past three months and the average value there is now $309,524.

QV Hawkes Bay Property Consultant Nicola Waldon said, “We’re certainly seeing a slowdown in value growth as we enter the usual seasonal slowdown.”

“The higher end of the market appears to have slowed, with vendors having to adjust sales price expectations. We’re seeing many properties being re-listed with a specific asking price or ‘offers over’ guideline, after failing to achieve a sale at the close of a tender or treaty sale process.”

“Entry-level properties, below the $400,000 mark, remain in strong demand particularly from First Home Buyers who are taking advantage of the Kiwisaver and Welcome Home Loan Scheme. We’re also seeing high rents and low interest rates provide further incentives for people to enter the property market. Finally, the lifestyle appeal of Hawkes Bay continues to attract many out of town buyers, which is helping maintain overall demand for property.”

“From an investment perspective, we’re seeing ‘Mum and Dad’ investors become more active as they look to take advantage of high equity in their existing homes. Given the high rents and shortage of rental listings, we’re also seeing parents often use their equity to help their families enter the property market or buying property for their kids to rent.”    

Provincial centres

In the North Island, growth is starting to slow across the regional centres. Wairoa leads the way in quarterly growth, up 11.5%, followed by Tararua which is up by 6.3%. A good example of the market slowdown is in the South Wairarapa, where quarterly growth is down to 2.5% after a period of strong value growth. 

In the South Island, the southern parts including the Queenstown Lakes District and Invercargill continue their steady value growth, up 3.5% and 1.8% respectively although, like many other regional areas, growth has also slowed down when compared to the last couple of years. 

Annual Change in Values
 
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