New Zealand’s property market remains quiet although first home buyers remain very busy, particularly on the outskirts of New Zealand’s main centres.
The wider Wellington region is a great example of this, where many outer city suburbs continue to attract high numbers of first home buyers. According to recent Corelogic Buyer Classification data, over half of all buyers in many outer city Wellington suburbs are first home buyers. This section of the market continues to benefit from the low interest rate environment as well as less buyer competition.
Despite this trend, overall the New Zealand property market remains quiet with value growth continuing to slow. The rate of annual growth nationally dropped from 3.5% in June last year to 2.0% at the same time this year. The rate of quarterly value growth, nationally, has dropped to 0.1%. Meanwhile, residential property value growth across the Auckland Region decreased by 2.7% year on year and by 1.2% over the past quarter. The average value for the Auckland Region is now $1,027,113.
“At the same time, there is still plenty of life left in the market. The Western Bay of Plenty region, for example, has seen strong quarterly growth of 5.0% with a relatively high average value $679,914. We’ve also seen many lower North Island regions, such as the Horowhenua and Manawatu, also experience strong value growth over the past three months.”
“With affordability continuing to be a major constraint, location is becoming increasingly relevant. It’s the outskirts of city centres that continue to see plenty of activity, particularly from first home buyers. The wider Wellington region is a great example of this with areas like the Hutt Valley continuing to attract young families and professionals looking to take their first step on the property ladder. In fact, according to recent Corelogic Buyer Classification data, over half of all buyers in some outer city Wellington suburbs are first home buyers. This section of the market continues to benefit from the low interest rate environment as well as less competition during the quieter winter period.”
“Affordability constraints is also impacting on the type of properties selling. We continue to see new townhouses sell well, particularly in Wellington, as they provide a more affordable solution than stand-alone properties.”
“With the Healthy Homes Bill having taken effect this week, we’ll be closely monitoring the impact this has on the investment market and on rents. At this stage, we have observed no major impact on the investment market although we may well see some upward pressure on rents, as landlords face up to the increased costs of keeping their properties insulated to the required standards.”
Value growth remains slow across Auckland's suburbs. North Shore values dropped 3.9% in the year to June and by 1.7% over the past three months. The average value there is now $1,177,454. The former Auckland City Council central suburbs dropped 3.3% year on year and by 1.9% over the past three months and the average value there is now $1,207,580. Waitakere values decreased by1.5% year on year and stayed flat over the past three months. Manukau values decreased by 1.5% year on year and by 0.4% over the past three months; Papakura values increased 0.9% year on year and by 2.6% over the last quarter and the average value there is now $709,445; Franklin values increased by 1.6% year on year and Rodney values were down 1.3% year on year.
Tauranga home values rose 6.3% year on year and by 1.5% over the past three months. The average value in the city is $743,978. The Western Bay of Plenty market rose 8.9% year on year and by 5.0% over the past three months. The average value in the district is now $679,914.
QV Tauranga Property Consultant Alecia Dalzell said, “Low interest rates are driving an increase in market activity at this time of year especially in the first home buyer market and for properties which are priced at the right level.”
“New home building companies are reporting that steady demand remains for sections with back up offers on well-located properties.”
Hamilton City home values increased by 0.9% over the past three months and by 4.7% in the year to June. The average value in Hamilton is now $585,264.
Values across the whole Wellington Region rose 7.9% in the year to June and increased 1.0% over the past quarter and the average value is now $709,803.
Wellington City values increased 6.0% year on year although dropped by 0.2% over the past three months and the average value there is now $827,125. Meanwhile, values in Upper Hutt rose 15.0% year on year and 3.8% over the past three months; Lower Hutt rose 11.3% year on year and by 3.6% over the past quarter; Porirua rose 6.8% year on year and by 0.1% over the past quarter. Finally, the Kapiti Coast rose 7.8% year on year and 2.5% over the past three months.
QV Wellington Senior Consultant, David Cornford said, “Most areas of Wellington City have been stable over the last three months, however the Hutt Valley has continued to see value growth with Lower Hutt recording 3.6% growth and Upper Hutt recording growth of 3.8%.”
“Value growth in the Hutt Valley can largely be attributed to the strong presence of first home buyers who are taking advantage of low interest rates and slightly less competition from investors.”
“The Hutt Valley has experienced significantly higher value growth over the last 12 months compared to Wellington City, with Upper Hutt recording growth of 15%, Lower Hutt 11.3%, this compares to value growth in Wellington City of 6%. This is largely attributable again to the strong presence of first home buyers snapping up more affordable properties.”
“Property values in Wellington City have been relatively stable over the last three months and steady demand continues. Well-presented and well-located properties continue to attract a lot of attention from buyers.”
“New townhouses are continuing to sell well as they provide a more affordable alternative to stand-alone homes.”
Nelson residential property values rose 7.1% in the year to June and by 1.2% over the past quarter. The average value in the city is now $624,307. Meanwhile, values in the Tasman District have also continued to rise, up 5.9% year on year and 2.1% over the past three months. The average value in the Tasman district is now $611,397.
QV Nelson Senior Consultant, Craig Russell said, “Market activity has been more subdued in recent weeks, as buyers benefit from fewer multi-offer situations.”
“Owner/occupiers tend to be more active than investors, as increased compliance costs and lower yields make residential investment less attractive.”
“Today’s low interest rates, that are tipped to fall further, may give the market some impetus over Spring.”
“Finally, we’re seeing well-maintained and located older properties in Richmond generally sell in the $500,000 to $750,000 price bracket. These properties have proven popular with families.”
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 0.5% over the past three months. The average value in the city is now $499,934
Dunedin residential property values are continuing to steadily rise. Values have increased 12.2% in the year to June and by 2.0% over the past three months. The average value in the city is $460,448.
QV Dunedin Property Consultant, Tom Patterson, said, “Dunedin residential values continue to show steady growth across all main areas. The average price for Dunedin City in June 2019 is recorded at $460,448 showing a 2% increase over the last three months and a 12% increase from June 2018. The average value is up 60.9% relative to the previous market peak in 2007.”
“The Dunedin South and Taieri areas in particular recorded strong annual increases of 13.8% and 13.5% respectively. This reflects the fact that investors and first home buyers remain prevalent in the current residential market. There is also a good level of demand for residential properties in the low to medium price bracket.”
Horowhenua leads the way in quarterly growth, up 11.1%, followed by Kawerau (10.0%) and Manawatu (9.6%). In terms of annual growth, Kawerau leads the way, up 27.5%, followed by Otorohanga (27.0%) and Tararua (24.2%).
Waimate lead the way in quarterly growth, up 10.8%, followed by Invercargill (3.3%) and Marlborough (3.0) Southland leads the way in annual growth, up 14.1%, followed by Invercargill (13.3%) and Clutha (11.0%).
Annual Change in Values
*Please note, our partners CoreLogic have incorporated an improvement to the methodology in November 2018, which underpins the House Price Index figures. The change only concerns aggregated indices (i.e. where an index covers multiple Territorial Authorities). This new methodology provides less volatility and a more precise measure of value changes. This change only impacts recent movements, with the historical series mostly not impacted. If you have any questions regarding the change, please get in touch with us by emailing firstname.lastname@example.org
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