differences in house price changes between urban, provincial and rural areas
The latest QV property statistics show that house values for all New Zealand have recovered from the low of early this year. But not all parts of the country are behaving the same way. There are clear differences between the main urban areas, the provincial centres, and rural areas.
We have looked at how property values have changed in these areas since the last time house values were relatively static in 1999/2000.
Across the country there are 72 Territorial Authorities, or local councils. These have been classified as Main Urban Areas (for example Auckland City, Wellington City, Dunedin City), Provincial Centres (for example New Plymouth, Napier and Nelson), or Rural Areas (for example Kaipara, South Wairarapa, and Waitaki).
Across New Zealand, house prices were relatively static from 1998 to 2000. During the next 7 years house values rose dramatically, and more than doubled before reaching their peak in late 2007. During 2008, house values dropped nearly 10% from this peak, before leveling in early 2009. During the last few months values have risen 3.4% and are now 6.6% below their peak.
But the changes since 2000 are quite different between Urban, Provincial and Rural areas.
Compared to all New Zealand, values did not rise as much from 2000 to 2007 in the Main Urban Areas, although they still more than doubled. Over the same period values in Provincial and Rural areas increased by nearly two and a half times.
As the market declined in 2008, values dropped the most in the Provincial centres, declining over 10%. Values in the Main Urban Areas also dropped nearly 10%. However in the Rural areas house values only dropped 7.5%.
While for total New Zealand house values have risen 3.4% over the last few months, it is clear that this being driven mostly by the main urban areas which have risen 4.6%. This is hardly surprising given that most of the houses are in the Main Urban Areas. In contrast, the Provincial Areas have risen only 1.8%, and in Rural areas there has been no change.
One of the main drivers for increasing values over recent months has been an insufficient supply of properties for sale to meet the demand from motivated buyers. As a result, these buyers are competing for the properties and pushing the sales prices up. But this imbalance is most evident in the main centres. In many smaller towns and cities there is no such shortage of properties for sale, and as a result prices have not been inflated as they have in the main centres.
As a result of these changes, values are now less than 6% below their peak in the Main Urban areas, nearly 9% below in the Provincial Centres, and nearly 8% below their peak in Rural Areas.
These clear differences between areas of New Zealand show that there is not one property market. Local influences affect how values change in that area. Even the differences described above will not apply universally – there will be differences between towns in the same area, between suburbs in the same town, and between streets in the same suburb.