Affordability constraints have put the brakes on national value growth, particularly in high-value regions.
Dunedin continues to see the strongest value growth out of all the main centres, while steady growth continues in Wellington and values drop slightly in Auckland.
Dunedin, with an average value of $451,199 - well below the national average of $686,523 – has seen solid growth for yet another month.
Wellington City saw values rise modestly, up 1.9% while Auckland saw values City saw values drop 0.2% over the past quarter.
The latest QV House Price Index shows nationwide residential property values have increased steadily over the past year by 2.6% and by 0.5% in the three months to March.
Meanwhile, residential property value growth across the Auckland Region decreased by 1.5% year on year and by 0.8% over the past quarter. The average value for the Auckland Region is now $1,039,917.
For a full breakdown of the QV House Price Index figures for March please click here
QV General Manager, David Nagel said, “Our latest figures show that value growth continues to slow overall, with the national annual growth rate dropping from 7.3% in March last year to a current rate of 2.6%.”
“Affordability constraints are a key factor behind this slowdown, particularly in areas such as Auckland City which has an average value of $1,230,817. The strongest value growth are generally being seen in areas such as Rotorua and the Hawkes Bay.”
“Rotorua, in particular, experienced a notable increase in average value, up 7.0% with an average value of $472,566. This region appears to be attracting buyers possibly priced out of the nearby Tauranga and Auckland markets.”
“We’re seeing increased demand for different types of housing, such as low maintenance, architecturally designed townhouses in Wellington. These properties offer buyers good value for money and we’d expect this trend to continue, particularly in our larger, higher-value cities.”
“We’re anticipating more of the same over the coming months. The Tax Working Group’s recommended Capital Gains Tax shouldn’t impact investor activity substantially in the short term although this might change in the months leading to its likely implementation date in April 2021.”
“We may see an increase in buyer demand, following the Reserve Bank’s indication that a cut to the Official Cash Rate (OCR) is likely. This scenario is anticipated to keep interest rates low, which in turn may increase demand for residential property across New Zealand. We’ll be closely watching to see how this develops.”
Value growth remains slow across Auckland's suburbs. North Shore values dropped 3.1% in the year to March and by 1.2% over the past three months. The average value there is now $1,197,945. The former Auckland City Council central suburbs dropped 1.1% year on year and by -0.2% over the past three months and the average value there is now $1,230,817. Waitakere values decreased by 1.3% year on year and by 1.1% over the past three months. Manukau values decreased by 1.1% year on year and by 1.5% over the past three months; Papakura values decreased 1.7% year on year and by 1.4% over the last quarter and the average value there is now $691,235; Franklin values dropped by 0.5% year on year and Rodney values were up 0.3% year on year.
QV Auckland Property Consultant Hugh Robson provides insight into the market trends seen in West Auckland. “The new developments in Hobsonville Point, Whenuapai and Swanson continue to progress well. We’re also seeing first home buyers remain fairly active, mainly in the $600,000 to $750,000 price range.”
“There are numerous Housing New Zealand developments under construction across Auckland. And central city suburbs are still fairly active although prices appear to be flat-lining at present.”
“Investor activity appears to have eased a little, possibly due to the proposed new landlords’ responsibilities. Some investors could be sitting tight, potentially waiting for more information regarding the proposed Capital Gains Tax to come to light.”
Values across the whole Wellington Region rose 8.4% in the year to March and increased 2.2% over the past quarter and the average value is now $702,896. Wellington City values increased 7.9% year on year and by 1.9% over the past three months and the average value there is now $828,645. Meanwhile, values in Upper Hutt rose 12.3% year on year and 2.9% over the past three months; Lower Hutt rose 8.2% year on year and by 3.0% over the past
quarter; Porirua rose 8.9% year on year and by 1.1% over the past quarter. Finally, the Kapiti Coast rose 6.8% year on year and 1.7% over the past three months.
QV Wellington Senior Consultant, David Cornford said, “A lack of stock combined with strong buyer demand is underpinning the Wellington property market and this is resulting in a buoyant market and values continuing to track upwards.”
“The lower end of the market is seeing the greatest level of enquiry, as first home buyers remain very active in the region particularly in the Hutt Valley and Porirua where a modest home can still be purchased for less than $450,000.”
“The Hutt City and Upper Hutt have recorded the strongest value growth over the last three months at 3% and 2.9% respectively. These regions offer more affordable housing and it is this segment of the market which is performing the strongest.”
“There is strong demand for architecturally designed, low maintenance properties that are relatively affordable. These properties generally have more modest sections compared to the traditional New Zealand family home. As a result, we are seeing new developments of townhouses in the region attracting strong interest and selling quickly.”
“Despite the recently announced minimum standard rental rules and the possibility of ring fencing of rental losses; investors remain active. We’re seeing purpose built, multi flat properties attracting a good level of interest, with rents continuing to track upwards combined with the expectation of continued low interest rates helping to support this segment of the market.”
QV Property Consultant Rupert Yortt observed similar trends in the city, commenting, “There’s been a good level of interest for any new development projects, particularly townhouses.”
“Stock numbers in the city have increased noticeably since a severe shortage last Winter. There is a bit more choice for purchasers at the moment however online listing numbers are still below the long term average.”
Hamilton City home values increased by 1.6% over the past three months and by 4.5% in the year to March. The average value in Hamilton is now $580,285.
Tauranga home values rose 3.7% year on year and by 1.7% over the past three months. The average value in the city is $733,102. The Western Bay of Plenty market rose 1.6% year on year and dropped 1.0% over the past three months. The average value in the district is now $647,838.
It’s a continuation of recent trends for Christchurch City, with value growth remaining modest. Values are slightly up year on year and slightly increased by 0.1% over the past three months. The average value in the city is now $497,298.
Dunedin residential property values are continuing to rise and have increased 13.3% in the year to March and by 3.7% over the past three months. The average value in the city is $451,199. The Dunedin – Taieri area experienced strong value growth, up 12.5% annually and 4.0% over the past quarter.
Nelson residential property values rose 8.9% in the year to March and by 2.5% over the past quarter.
The average value in the city is now $616,634. Meanwhile, values in the Tasman District have also continued to rise, up 6.4% year on year and 1.6% over the past three months. The average value in the Tasman district is now $598,826.
QV Nelson Property Consultant, Craig Russell said, “Properties for sale with unrealistic price expectations have sat on the market for an extended period, and will struggle to sell until vendors’ price expectations align with the market.”
“Poorer quality investment properties with deferred maintenance are coming available for sale as experienced investors’ dispose of these properties due to weaker yields, upcoming healthy home compliance costs, and lack of perceived capital gain going forward.”
“The Reserve Bank’s indication that the next change in the official cash rate may be a cut is expected to keep interest rates low and may further fuel demand for residential property over the winter.”
“Listings have been strong, with values continuing to increase in recent months particularly for entry level stock.”
Otorohanga leads the way in quarterly growth, up 20.2%, followed by Rotorua (7.0%) and Central Hawkes Bay (5.7%). In terms of annual growth, Kawerau leads the way, up 24.2%, followed by Wairoa (22.4%) and Tararua (21.7%).
Southland lead the way in quarterly growth, up 9.2%, followed by Clutha (7.4%) and Westland (6.5%) Dunedin – South leads the way in annual growth, up 15.1% followed by Dunedin - City (13.3%) and Dunedin (Central and North), up 13.0%.
Annual Change in Values
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