Property is at the heart of the Kiwi Changes in the market affect all of us, and that’s why talk in the media of a market slowdown has been pricked a lot of ears.
Look past all the noise and find out what’s really happening in New Zealand’s property market right now.
AUCKLAND IN SLOW MOTION
QV data puts Auckland’s average house value growth at 2.8 per cent over the last year.
Auckland is our biggest city by far and its property market has a profound affect on those in towns and cities nationwide (particularly in the upper North Island). That’s why reports of price stagnation and lower sales activity are so significant.
QV data puts Auckland’s average house value growth at 2.8 per cent over the last year, a number which is roughly equal to inflation over the same period. What’s more, the Real Estate Institute of New Zealand has reported that sales activity was 21.5 per cent lower this August than during the same time last year. This decreasing activity suggests that value stagnation is likely to continue.
The most relatable sign of the times may be the recent Block NZ result. Shockingly the biggest winners in the final auction made only $31,000, whereas in previous seasons winners have made at least five times that. While a significant price decrease is unlikely in the near future, there’s no doubting the fact that Auckland’s housing market is in a state of change as you read.
WELLINGTON STILL GOING STRONG
Wellington’s market is showing few signs of slowing down with Auckland’s. In fact, QV data shows that average property values there have increased by an impressive 12.9 per cent over the last year. With an average value of only $605,435, it would appear that there’s plenty room left for Wellington’s prices to go up.
What’s more, Real Estate Institute of New Zealand data shows that Wellington (along with Nelson and Hawkes Bay) has less than 10 weeks inventory available for sale. This means that demand is outstripping supply and further upward pressure is being placed on house prices.
Smart investors should look to Lower Hutt City in particular. Here the average value has risen by 18.7 per cent in the year to August, to reach a still-affordable $515,961.
Wellington’s market is showing few signs of slowing down with Auckland’s.
CHRISTCHURCH’S MARKET STALLS
Christchurch average house values have completely stagnated. In fact, QV data shows that over the 12 months to August house values here stayed the same, and even dropped in the city’s east and the Bank’s Peninsula area.
CoreLogic RP Data’s research shows that this is hurting sellers already. Over the year ending this July, 12 per cent of investors in Christchurch sold for a loss – a number that would have been unheard of just a year ago. As dire as it may sound, these changes are positive for the market here, constituting a slow return to affordability and sustainability without a rapid erosion of homeowners’ equity.
This change is key in a post-earthquake Christchurch, as the city revitalises itself and attracts begins to attract residents from elsewhere in New Zealand and the world.
THE REGIONS AREN’T FEELING THE STING
The value stagnation occurring in Auckland, Christchurch and several other centres throughout the country has left several regional areas untouched. For example, QV data shows the following areas have experienced growing average property values over the year to August:
Whangarei increased by15.7 per cent to $497,489.
Nelson: increased by 13.6 per cent to $538,136.
Waikato: increased by 14.1 per cent to $450,349.
Rotorua: increased by 17.1 per cent to $407,318.
Central Otago: increased by 15.8 per cent to 458,418.
What this may show us is that prices in Auckland and increased restrictions of lending have caused Auckland’s investors to look elsewhere pushing up demand in the regions. It could, however, be a simple lack of supply causing these increases.
PREDICTIONS FOR THE FUTURE
With the election mere days away and the country in a state of flux, it’s near impossible to accurately predict the future of our property market. However, one thing is for sure – measures to control investors have been effective. If the next elected government cracks down on this group even harder with new legislation, we could see the market continue to slow down in Auckland, and throughout the country.
If that doesn’t occur, the same supply shortage still exists, and interest rates remain low, so Auckland’s market may not dip as some have forecasted. Without a crystal ball it’s impossible to know for sure – so make sure you seek the advice of a local expert next time you buy or sell property.