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Property Values on Cliff Edge

House prices are showing the first signs of fragility as Level 2 Lockdown protocols allow for the property market to return to a new normal.

A disconnect in expectation is developing between vendors and purchasers amidst declining sales volumes suggesting we are on the brink of a material decline for the first time in nearly 12 years.  

The last time the residential property market experienced a period of sustained decline was following the GFC where residential values fell almost 10% over a six month period in 2008. 

The market is teetering on a cliff’s edge as we enter winter, the question now is how far will the market fall? 

The latest QV House Price Index data for May provides us with the rolling three month average strength of the residential property market, but it doesn’t illustrate the dramatic impact COVID-19 had had in the real estate industry since the country went into Level 4 Lockdown on 25th March. 

While the move to Level 2 Lockdown has provided an opportunity for real estate agents, vendors and purchasers to resume the trade of real estate, sales volumes are significantly impacted and this isn’t reflected in the latest QV House Price Index data series. 

“The key point we can note from the QV House Price Data this month is the gradual decline in quarterly growth in May, with 14 of the 16 major cities we monitor showing a reduction in the rate of growth since April. This trend is likely to continue as a greater proportion of post-lockdown sales are used in the HPI calculations” says Mr Nagel. 

QV General Manager David Nagel said “The data shows the property market was continuing to perform strongly throughout early-mid March indicating strength right across the country. However with sales volumes for April and May being down significantly on normal April and May activity, the data is skewed towards the earlier stages of the three-month period where volumes were much higher”.

“When we look at just the April and May transactions in isolation it shows a definite impact with post lockdown sales on average down by around 5% on pre-lockdown levels. As we expected we’re seeing regional variations as the various locations are impacted differently, depending on their reliance on tourism and other employment impacted by COVID-19”, he says. 

“Early signs post lockdown were quite positive, with a shortage of quality listings and a number of May transactions appearing to show the market picking up where it left off prior to lockdown. As a result, vendors were initially bullish with their price expectations and agents were reporting multiple bids at auctions and tenders, as well as an active buyer pool including investors and first home buyers”, says Mr Nagel. 

“But the May bounce in sales volumes was likely the result of pent up demand from six weeks of lockdown. We’re now seeing buyers exercising caution with many expecting greater volumes of listings to come on stream later in the year as the full impacts of the economic downturn start to bite”, he says.

The average value nationally increased 2.4% over the past three month period, up from 3.0% in April, with the average value now sitting at $739,539. This represents an increase of 7.7% year on year, slightly up on annual growth last month.  The average value in the Auckland Region sits at $1,086,223, up 2.7% over the last quarter, and up 5.4% year on year.

“Despite this, we’re still seeing very strong demand for well located, affordable properties that are attractive to both investors and first home buyers. But with significant reductions in auction clearance rates, particularly in some of high risk locations, it makes for a worrisome time for the property market”, says Mr Nagel. 

The Real Estate Institute has reported listings are down nearly 12% on the same time last year and 19% on levels early this year, which is helping to maintain a level of scarcity for buyers seeking to purchase property. But while this is assisting with price stability, what is more concerning is a recent Commission for Financial Capability survey which found that 10 percent of households had missed a rent or mortgage payment, with just over a third of households experiencing financial difficulties.

“We’ve seen a major shift in the market fundamentals with strong economic growth pre-lockdown and nearly full employment now a distant memory. While low interest rates are here to stay, the high net migration that was a key driver of value growth won't be returning in the near to medium term”, says Mr Nagel.

“While the data is still sketchy, we’re now very confident that the market has come back already from value levels we saw in February and March, particularly in some of the high risk locations that had previously experienced a sustained period of value growth. What we don’t know yet is the quantum of correction that the market can expect to see as the economy transitions post-pandemic” he says.  

“Over the coming months we’ll likely see more listings gradually coming on stream after the cushioning effect of the Government wage subsidy comes to an end and bank mortgage holiday periods expire.  Unfortunately, this will be when the full impact of the pandemic will be reflected on real estate values”, says Mr Nagel.

QV House Price Index 2020


The Auckland area saw values increase 5.4% year on year and 2.7% over the last quarter.  The average house is valued at $1,086,223. 

Within Auckland, houses in the Rodney area experienced 2.1% quarterly growth while North Shore values went up 3.6%, Waitakere at 3.0% and Manukau at 2.7%.  Values in the Papakura area went up slightly by 1.0% over the three month period. 

Annual growth painted a different picture with Auckland’s North Shore leading the way at 6.6 growth, followed by Auckland City at 6.2% and Waitakere at 5.5%. 

“Data indicates a relatively flat month of May although it is too soon to make assumptions around how the market has been affected as a whole, particularly in the short to medium term”, says QV Senior Consultant Rupert Yortt. 

“Anecdotal evidence suggests that demand levels are still good for entry and mid level properties. First and second home buyers who had little disruption with their employment during the lockdown period are still actively looking while higher value properties are tending to receive lower levels of interest. The exception here being well-presented, centrally located properties that are showing little change in prices from pre-lockdown.”

“Buyers are being cautious with off the plans purchases and smaller development plans throughout the region are likely to be put on hold in the current uncertain climate.”

“Overall, there is a mixture of both cautious optimism and a wait and see approach for those not prepared to rush their decision-making”, says Mr Yortt.


The data indicates there has been modest value growth seen in Tauranga with values increasing by 6.9% over the last twelve months and 3.2% over the last quarter. The average value is now $792,643.

QV Property Consultant Derek Turnwald  says “Demand for property after the COVID-19 lockdown has been reasonably strong, particularly in Papamoa and Mount Maunganui”. 

“Real estate agents have reported that some homeowners reassessed their housing needs over the lockdown period and are now keen to look through listed property encouraged by the current low interest rates and relaxed loan to value ratios. The number of listings remains low throughout the city”, he says.


Hamilton data shows values increasing by 7.5% over the last twelve months and 1.0% over the last quarter. The average value is now $628,992. 

In May, 471 sales were recorded across Hamilton City with the north east topping the city’s count with 141. The north east also continues to top the average median price within the city, now at $774,291. A Hamilton residential property on Lake Domain Drive was sold for $3.2 million in May, which is believed to be a record for the city.

QV Property Consultant Jarrod Hedley says values appear stable across the Waikato region post lockdown. “Agents are reporting a shortage of quality listings on the market post lockdown, with multiple offers being expressed for properties that are well priced and attractive to the market. Current sentiment is that all types of buyers are active in the current seller’s market, underpinned by the region not being as vulnerable as other localities in terms of negative monetary dynamics”.

“Development had been increasing all across the Waikato prior to COVID-19, with developers now trying to bring properties to market sooner than previously anticipated”.


Rotorua data shows values increasing by 9.0% over the last twelve months but 0.0% over the last quarter. The average value is now $517,916. This is 76.4% above the last market peak which was in 2007. 

QV Property Consultant Derek Turnwald says that COVID-19 has slowed the residential property market in Rotorua more than other Bay of Plenty cities and towns due to the high reliance of the local economy on tourism. 

“Demand for residential property in the modest to medium value ranges however, remains reasonably strong, particularly under $400,000 which is the Kiwisaver HomeStart cap for the Rotorua area”. 

“Owner occupiers and investors have been keen to take advantage of the low interest rates and relaxed loan to value ratios and most listings are resulting in multi offer situations. The demand in the upper value ranges has been a little bit more subdued since the COVID-19 lockdown and some vendors are having to adjust their expectations to meet the market. There is a lack of listings in all value ranges”.

New Plymouth

New Plymouth data shows values increase by 9.7% over the last twelve months and 0.6% over the last quarter. The average value is now $507,023.

QV Property Consultant Danny Grace is seeing a strong market at the lower end. “Agents are reporting that due to the LVR changes first home buyers and investors are in a stronger position and can purchase for up to $30,000 more than they could prior to lockdown.  Agents also report that investors in a comfortable cash position have contacted them looking for bargains. We can expect those in a strong position to cherry-pick properties, especially from vendors who need to sell”.

“Vendors on the other hand are tentative about listing property at this uncertain time and are waiting to see what the market does before committing,” says Mr Grace.

“Looking forward, we expect to see our largest industries Dairy, Oil and Gas influencing the higher priced end of the market. When the Oil and Gas industry tightens we typically see executives leave the region for overseas opportunities and this can result in a number of higher value properties on the market, as well as a reduction in buyers wanting them”.

Hawke’s Bay

Modest value growth was seen in Napier and Hastings with values increasing by 9.9% and 14.2% respectively over the last twelve months.  Napier increased 4.1% over the last quarter while Hastings values increased 4.6% over the same period. The average value for Napier is $611,969, while Hastings sits at $593,522.

QV Property Consultant Nicola Waldon says real estate agents are reporting a busy few weeks since we entered level 2 with numerous sales occurring during lockdown. “There still appears to be a good level of demand for housing stock in both Napier and Hastings with multi-offer situations still prevalent for well-presented properties. One agent reported a sale within 24 hours on a property in Havelock North.” 

“There are still a low number of listings hitting the market (as was the case pre-COVID-19) with only a small proportion of those due to financial circumstances brought about by the repercussions of the pandemic. There are still buyers there, from people who have sold pre or during lockdown to some agents reporting interest from Kiwi’s returning from overseas” says Ms Waldon.

“Price levels appear to be following the pre-COVID-19 levels at the moment, with the market still pretty buoyant. There has been an increase in long-term rentals hitting the market as AirBnB operators make a shift. We expect to see an effect on rental levels due to this increased stock.”

“Many consider Hawkes Bay to be in a bit of a bubble given the strong primary sector with agriculture and horticulture and a much smaller tourism sector than many other areas of NZ. We don’t expect the full effects of COVID-19 take hold until the next few months when those who took mortgage repayment holidays restart their mortgage and the Government wage subsidy has ended.

Palmerston North

Strong value growth was seen in Palmerston North with values increasing by 15.3% over the last twelve months and 1.8% over the last quarter. The average value is now $509,859.

The Palmerston North residential market was showing continued steady growth leading up to the lockdown says QV Property Consultant Olivia Roberts. “Although in the final week we could see the impacts of uncertainty starting to have an effect, post lockdown we have seen a limited number of sales that appear to be at or close to pre-lock down levels.” 

“Real estate agents have typically reported steady demand with multiple offers being received, particularly for tidy and well maintained dwellings in good locations. There is still uncertainty as we have not yet seen the full effect COVID-19 has had on the property market” says Ms Roberts.


The Wellington area saw values increasing by 7.9% over the last twelve months and 0.7% over the last quarter. The average value is now $894,710.

Hutt City led the way with 17.7% annual growth and 3.2% quarterly increase to the end of May. The average price is $688,394. Upper Hutt and Porirua also saw growth with annual increases of 13.5% and 16.7% respectively.  The average prices there are now $633,343 and $692,264.

“Pre COVID-19 value growth in the Wellington region has plateaued and buyers are taking a more cautious approach but at this stage, there is no evidence to suggest values have gone backwards”, says QV Senior Consultant David Cornford. “Open homes have been well attended and multiple offers are still common for well-presented properties in desirable locations. Properties which have defects or negative features however are proving to be a harder sell in this new environment.”

“We are seeing slightly more properties failing to sell at tender, indicating that in some cases there is a disconnect between the buyers and sellers market expectations. In the Wellington region there is a listings shortage and this will help to support values. The high number of government employees in the City will also help to provide a buffer against the effect of COVID-19 on the property market”, says Mr Cornford. 

“Attractive interest rates have peaked the interest of first home buyers who have job security and this segment of the market appears to be holding up well.”

“An auction in the Hutt Valley was well attended with buyers hoping to score a bargain, however, with several strong bidders in the room a solid sale price was obtained.”


Modest value growth was seen in Nelson with values increasing by 5.4% over the last twelve months and 0.7% over the last quarter. The average value is now $658,374.

“The Nelson/Tasman property market performed strongly up until the lockdown with good numbers at open homes, and values increasing at a moderate level”, says QV Senior Consultant Craig Russell. “However sales transacting post lockdown suggest the sting has now been taken out of the property market with weaker sale prices occurring in April and May.” 

“Conventional, well maintained properties have been performing better than more riskier properties. In saying this the Nelson/Tasman property market has generally been one of the more stable property markets in New Zealand largely due to its desirable lifestyle and diversified economy.”

“There has been a substantial increase in new listings over the past 1-2 weeks which suggests that some vendors were holding off selling until the lockdown ended. Some agents reported strong interest for properties as the lockdown restrictions eased with some multiple offer situations occurring.”


Modest value growth was seen in Christchurch with values increasing by 3.7% over the last twelve months and 1.0% over the last quarter. The average value is now $517,376.

“The Christchurch residential property market has thus far remained active and with strong demand for property at the lower to mid-range, $300,000 - $550,000 price bracket”, says QV Senior Consultant Kris Rogers.  “Real estate agents have reported good numbers attending open homes in this value range with first home buyers prevalent, being encouraged to the market by record low interest rates and continued good affordability.”


The data shows strong value growth continues in Dunedin with values increasing by 21.1% over the last twelve months and 4.2% over the last quarter. The average value is now $552,475.

QV Property consultant Tom Patterson says “Demand for residential property in Dunedin City has returned to a reasonable level with local agents reporting a good level of enquiry, particularly in the lower to medium price brackets with multi-offer scenarios still being reported”.

Queenstown Lakes

Modest value growth was seen in Queenstown with values increasing by 3.0% over the last twelve months and 0.5% over the last quarter. The average value is now $1,218,418. 

QV Property Consultant Greg Simpson notes that more properties are being turned in at auction. “Domestic buyers are hesitant due to the current market conditions. While auctions continue to be well attended during level 2, purchasers are reluctant to purchase unconditionally. As a result we are likely to see more sales eventuate post-auction.”

“The market may be correcting but properties are still selling at a fair price. We’re not seeing signs of distressed selling”, says Mr Simpson.


The data shows strong value growth was seen in Invercargill with values increasing by 16.8% over the last twelve months and 2.0% over the last quarter. The average value is now $350,019.

QV Property Consultant Andrew Ronald is seeing strong demand post lockdown for properties within the affordable $250,000 to $400,000 range. “Multiple  offers remain common and prices are at similar levels to pre-lockdown. Buyers are predominantly locals and first home buyers and there is limited  investor interest. We’re not seeing much market activity in price ranges above $500,000.”

Provincial centres, North Island

South Waikato leads the North Island in quarterly growth, up 15.8%, followed by South Taranaki 6.7% and Whanganui 5.6%. Whanganui leads the way in annual growth, up 25.0%, followed by South Waikato 24.7% and Gisborne at 24.3%.

Provincial centres, South Island

Clutha leads the South Island in quarterly growth, up 13.5%, followed by McKenzie District 6.8% and Dunedin South 5.8%. Clutha also leads the way in annual growth, up 26.8%, followed by Dunedin South 23.4% and Dunedin Taieri District at 21.7%.