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Media Release: Affordability hampering spring resurgence

02 Oct 2019

Media Release

2 October 2019

The first month of spring hasn’t brought about the lift in activity or property prices that prospective vendors would have been hoping for.  September normally brings about a surge in market activity as vendors, having weathered the winter months, decide to list their properties for sale while buyers enjoy a wider range of housing stock to choose from.  

Commentators were divided over what this spring activity could bring to the market, with an increase in supply potentially impacting negatively on prices. With greater choice, some felt the market was set to surge again, particularly with first home buyers and investors competing for the more affordable properties. 

However, many parts of the country are still desperately short of property listings and this has contributed to the September results which show very limited growth in the major centres, with only some of the affordable regional centres still experiencing value growth.

The average value nationally has increased 2.4% year on year and is now $691,460.  This represents an increase of 0.6% over the past 3 months.  The average value in Auckland Region sits at $1,027,392, down 2.3% from 12 months ago and is unchanged over the last three months. 

QV General Manager David Nagel said “The residential markets of our main cities continue to struggle with Auckland, Hamilton, Tauranga, Wellington and Christchurch all showing a three month value changes of less than 1%.  Dunedin is the only exception, still hanging in there at 2.9% quarterly value growth.”  

“Despite this, we are still seeing pockets within these locations that are thriving with reports of multiple offers on good quality affordable housing stock, indicating the buyers are still out there if it’s the right property,” he says.

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

Some of the better provincial performers include Otorohanga and Kawerau Districts where residential values have increased 26.6% and 31.7% respectively.  Opotiki District has also experienced strong growth with values increasing 23% in the 12 months to September while Horowhenua values have increased 19.5% over the same period.

“The strong growth in many of these provincial locations tend to be areas where housing is significantly more affordable with average values less than $350,000. But even in these affordable locations, the rate of growth is generally slowing”.

“As spring beds in, we’ll likely see the number of listings increase and this will lead to greater sales activity as more buyers potentially enter the market. This could be driven by a combination of easing credit requirements from banks, coupled with added competition by the banks for market share.  The seasonal increase in the costs of renting when summer begins may also encourage more Kiwi’s into home ownership early next year.  The challenge for the market will be to keep pace with that rise in demand”.

Auckland

North Shore values dropped 3.5% in the year to September and by 0.3% over the past three months. The average value is now $1,173,529. The former Auckland City Council central suburbs dropped 1.5% year on year but has increased 0.6% over the past three months and the average value there is now $1,215,401.

Waitakere values dropped by 1.4% year on year and by 0.1% over the past three months. Manakau values decreased by 1.3% year on year and by 0.4% over the past three months; Papakura values dropped by 0.4% year on year and by 1.8% over the last quarter and the average value there is now $696,914; Franklin values increased by 0.2% year on year and Rodney values are down 0.9% year on year.

Auckland property consultant Hugh Robson notes that the “Auckland residential market remains fairly quiet as we head into spring. Typically, we should see a slight to moderate increase in the number of listings over the next 2-3 months, as people wanting to sell place their properties on the market hoping for a sale before Christmas.”

“In West Auckland, first home buyers continue to represent a good percentage of the sales occurring in the Waitakere area. These properties are generally in the $570,000 to $800,000 price range. We note there has been an increase in the number of properties being advertised with an asking price.”

“Well presented properties and properties located close to good amenities such as large shopping centres and transport routes are selling fairly quickly. A steady amount of re-development is taking place in suburbs such as Te Atatu Peninsula, Henderson, New Lynn and Avondale. Although down on previous years, investors are still active, many looking for bargains or ‘do up’ properties they can renovate themselves. With the current low interest rate environment and summer approaching, we expect to see a moderate increase in the volume of sales in the West Auckland area.”

“On the North Shore, there is a slightly more positive sentiment around the residential market compared to earlier in the year with a minor increase in activity expected coming into the summer months. Vacant sections are attracting marginally higher levels of interest but overall, everything remains relatively steady.”

“With the recent drop in interest rates, South Auckland is showing a similar trend with the lower end of the market getting strong levels of demand from first home buyers.  Historically, some pockets in South Auckland are predominantly investors driven but we have yet to notice a pickup of investor activities in those areas.” Says Robson.

Tauranga

Modest value growth has persisted in Tauranga with values increased by 0.5% over the last quarter. The average value is now $747,493 up 5.4% year on year.

Elsewhere on the East Coast, the affordable pricing of Gisborne with an average value of $369,210 continues to appeal with values growing 4.7% over the last three months and 13.5% year on year. 

Hamilton

Hamilton City home values increased by 0.9% over the past three months and increased by 3.2% in the year to September. The average value in Hamilton is now $590,500.

Jarrod Hedley, QV Senior Consultant notes that “In Hamilton City, a more passive response to current market segment conditions has continued however there is still reasonable demand for properties up to and around $500,000. We may see this demand continue into the yearly final quarter with supply levels for quality affordable properties still being stretched.”

“Current properties in this bracket with longer listing periods are usually poorer quality dwellings that are overpriced and incur additional risk to potential buyers. Strong activity for higher valued properties in the northern suburbs continues to provide the highest average price range for the city at $736,354. This compared to the total city average of $590,500.”

Wellington

Values across the whole Wellington Region rose 7.4% in the year to September and increased 0.8% over the past quarter and the average value is now $715,740.  

David Cornford, QV Senior Consultant says “There has been modest growth in the more affordable locations of Hutt Valley and Porirua while Wellington City remains relatively flat overall. First home buyers continue to lead the charge, particularly in the Hutt Valley and Porirua, and this segment of the market is strong. Market activity is likely to pick up as we move further into spring.”

“Strong values continue to be achieved and due to the lack of supply there is steady demand across most segments of the market. We continue to see strong demand for two bedroom flats and townhouses.”

Nelson

Nelson residential property values rose 7.1% in the year to September and 0.8% over the past quarter. The average value in the city is now $629,287. Meanwhile, values in the Tasman District have also continued to rise, up 4.3% year on year and down 0.4% over the past three months. The average value in the Tasman District is now $608,721.

QV Senior Consultant Craig Russell, said “September saw an increase in market activity with some multiple offer sale situations reported particularly for family homes in the entry to median price bracket.”

“We have seen an increase in properties coming onto the market as we enter spring, and also a modest increase in values. Vacant lifestyle blocks have been selling well in recent months particularly in the $300,000 to $450,000 price bracket.”

“A recent trend in residential subdivisions particularly around Richmond and Stoke are for smaller sections which have the benefit of a smaller capital outlay, and being more of an easy care option which suits the growing number of retirees in the location. Modern entry level homes in these areas typically range in the $620,000 to $720,000 price bracket.”  

Christchurch

The Christchurch market remains relatively steady with minimal growth of 0.7% recorded year on year to September 2019 says QV Senior Consultant Kris Rogers. The average value across the city is now $497,290.

“Spring time has started to have an effect on the Christchurch property market with a noticeable increase in activity in the recent weeks. There remains good demand for well-presented properties in the $350,000-$550,000 value range where first home buyers and ‘Mum and Dad’ investors are prevalent.”

“The general sentiment is one of increased positivity and cautious optimism with the hope that the market builds momentum in the coming months to the years end. This has been brought about by continuation of low interest rates and the relative good affordability available in the greater Christchurch region.”

Dunedin

Dunedin residential property values rose 12.8% in the year to September 2019 and by 2.9% in the past three months. The average house value in the city is now $473,702.

QV Dunedin Property Consultant, Tom Patterson, said, “There remains a shortage in residential housing stock in the wider Dunedin city area with house prices continuing to exceed expectations, particularly in the lower to medium price bracket which is drawing interest from first home buyers and investors.”

Provincial centres, North Island

Opotiki leads the way in quarterly growth, up 11%, followed by the Far North (10.5%) and South Wairarapa (6.6%). In terms of annual growth, Kawerau leads the way, up 31.7%, followed by Otorohanga (26.6%) and Opotiki (23.0%).

Provincial centres, South Island

Clutha leads the South Island in quarterly growth, up 5.9%, followed by Gore (5.0%) and Invercargill (4.7%). In terms of annual growth, Southland leads the way, up 16.5%, followed by Dunedin – South (15.5%) and Dunedin – Peninsular & Coastal (14.5%).

Annual change in values

To view a printable PDF version, please click here

For all media queries, please email our National Spokesperson David Nagel on david.nagel@qv.co.nz or call 04 576 4434

*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 communications@qv.co.nz

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