Changing house values by area type

At a national level property values rose throughout most of 2011 to end the year 3.5% below the previous market peak of late 2007. But there are differences in the residential housing markets between the urban, provincial and rural areas.

We have taken all the council areas around the country, grouped them depending on the predominant nature of the area, then calculated a QV residential index for each to track changing values over time.

The urban areas include Auckland (North Shore to Manukau), Hamilton, Tauranga, Wellington (including Porirua and the Hutt Valley), Christchurch and Dunedin.

Provincial areas include the likes of Whangarei, Rotorua, Gisborne, Palmerston North, Nelson and Invercargill. Typically these areas will have a large town or city.

The rural areas are those typically without a large centre, for example Kaipara, Otorohonga, South Taranaki, Carterton, Westland, Waimate and Southland.

All three area groups grew strongly in value up to the market peak of late 2007 to early 2008. They then all declined around 10% through the global financial crisis in 2008 and early 2009. The nature and extent of recovery since then is what separates them.

Urban areas

During the second part of 2009 and early 2010 the urban areas recovered over half of the losses seen in 2008. After another mini slump in 2010 for most of 2011 values have once again begun to rise and now sit only 1.1% below the market peak. Much of this growth in the urban areas is fuelled by Auckland and post-earthquake Christchurch, although in the latter part of 2011 the other main centres were showing signs of recovery also.

Provincial

The provincial areas also recovered a little in 2009 and early 2010, but only regained around 4% of the 10% lost during 2008. From early 2010 values began a slow slide before picking up a little in the second half of 2011. It appeared as if the provincial areas were going to follow the urban centres and grow through until the end of the year, but the last couple of months of 2011 saw values weaken again to end the year 8.9% below peak.

Rural

The rural areas dropped slightly less from peak but then recovered less in 2009 and early 2010 before dropping until early 2011. Since then values have mostly been increasing, especially in the last three months of the year. Values in rural areas are now 8.6% below peak.

2012 outlook

The strength in the New Zealand market is clearly being led by the urban areas. The rural parts of the country area also showing signs of strength on the back of good commodity prices and a productive spring. The provincial areas tend to be influenced more by local industry, the strength of which varies widely from one end of the country to the other.

We expect to see urban and rural values continue to increase in 2012, with provincial areas more likely to stay more or less stable.