Nationwide and Auckland residential property values rising again

Date: 09 February 2018

The latest monthly QV House Price Index shows nationwide residential property values for January increased 6.4% over the past year and values rose by 3.8% over the past three months. The nationwide average value is now $671,531. When adjusted for inflation, the nationwide annual increase drops slightly to 4.7%. 
Meanwhile, residential property value growth across the Auckland Region increased 0.7% in the year to January and 1.6% over the past three months, which is the highest rate of growth since November 2016. The average value for the Auckland Region is now $1,054,974. When adjusted for inflation, values dropped 0.9% over the past year.
QV General Manager David Nagel said, “January has seen values continue to rise in many places around New Zealand but values have dropped in others and in general activity has been slower in many places over the holiday season.”
“Values in Auckland are now rising with quarterly growth up 1.6%, which is a greater increase compared to the last quarter of 2017"
“The Wellington market continues to rise, however value growth has slowed in the Hutt Valley.”
“The Christchurch market remains flat while the Dunedin market continues to see a trend of steady value growth seen there throughout 2017.”
“Market activity across the nation appears to be picking up now that people have returned to work from the holiday season.
The easing of the LVR restrictions for both investors and home buyers this month, along with continued strong net migration, low interest rates, and a shortage of housing supply means it’s likely we can expect moderate value growth to continue during February and March which are annually the busiest months in the housing market.”
The former Auckland City Council central suburbs saw values rise 1.7% in the year to January and 1.8% over the three months. Auckland City - East continues its steady growth, up 2.9% year on year and 2.7% over the past three months, the average value there is now $1,576,640. Finally, Auckland City - Islands maintained its strong growth, up 12.6% over the past year and 4.7% over the last three months. 
North Shore values also ticked up again rising 1.2% in year on year and 2.3% over the last quarter. Waitakere values also rose 0.5% over the past three months although values were down 1.6% in the year since January 2017.
Meanwhile, values continue to increase in both Rodney and Franklin. Papakura showed particularly strong growth again rising 2.4% year on year and 2.3% over the last quarter. Finally, Manukau continued the upward trend, up slightly 0.3% year on year and 1.2% over the last three months.
QV’s Auckland Property Consultant William Liew said “January, as is often the case, was relatively quiet due to the holiday period. The signs do suggest that the heat has been taken out of the market and buyers are showing less urgency”
“We have also seen the ongoing impacts of the LVR restrictions, changes of lending criteria and uncertainly with the change of government, which have contributed to a cooling in the Auckland market.”
Values in Hamilton increased slightly by 0.3% over the past three months but rose on average by 2.6% or $13,598 over the past year from an average of $531,337 in January 2017 to $544,935 in January 2018.
QV Property Consultant, Andrew Jaques said, “The market has started off reasonably slow, but this is typical of the time of year with many people returning from holiday and settling back in. We can confirm that listing numbers are down slightly with the majority of sales being completed through negotiation as opposed to auction which can slow down the sales process”
“At the same time, there is plenty of demand for rental properties due to the seasonal influx of students, particularly in the Hillcrest and Hamilton East suburbs near Waikato University. In response, we have seen an increase in the number of 3-4 bedroom townhouses being built in these suburbs, as the area becomes more attractive to investors looking to make solid returns from families and students”
Tauranga/Western Bay of Plenty 
Tauranga home values increased 3.9% year on year or $26,123 from an average value of $672,752 in January 2017 to $698,875 in January 2018. Meanwhile, property values in the Western Bay of Plenty have risen 7.3% in the year to January from an average value of $575,089 in January 2017 to $617,120 in January 2018. Values dropped 1.7% over the past three months.
QV Tauranga Property Consultant David Hume said, “Strong migration continues to drive growth although we have continued to see less activity from Auckland investors as their local market stabilised.”
“Western Bay of Plenty continues to see good growth over and above the Tauranga area, partly due to the strong recovery of the Kiwifruit industry in Te Puke over the past five years.”  
Hawkes Bay
Values continue to rise across the Hawkes Bay region. Napier values rose 15.4% year on year and 3.5% over the past three months. The average value in the city is now $483,759 and values are now 42.2% above the previous peak of 2007. The Hastings market also continues rise up 15.7% year on year and 3.9% over the past three months and the market is now 45.5% higher than 2007. The average value there is now $453,616.
QV Senior Consultant Philippa Pearse said “The Hawkes Bay market remains strong although we have seen a slight decrease in activity typical for this time of the year with fewer listings than December.  Buyers are active in the market and a shortage of listings particularly in the mid-to-lower price range which continues to support value increases.”
“We are seeing continued interest from out of town buyers moving to the region. There is also a shortage of quality rental properties resulting in rental growth. I would anticipate this will result in value growth throughout 2018."
Values across the wider Wellington Region rose 9.0% or $52,489 over the past year from an average value of $582,322 in January 2017 to an average value of 634,811 in January 2018. Values across the region rose 4.0% over the past three months.
Wellington City increased by 8.9% year on year and 3.5% over the past three months. The average value there is now $764,560. Wellington – Central and South is up the most, increasing by 5.5% over the past three months alone and 9.3% in the year to January 2018.
Meanwhile values continue to rise strongly across Wellington’s regional centres. Upper Hutt is up 8.5% year on year and 1.1% over the past three months; while Lower Hutt rose 8.4% year on year and 0.6% over the past quarter. Further north, Porirua and the Kapiti Coast maintained their solid growth over the past year, up 13.4% and 12.9% respectively.
QV Wellington Senior Consultant, David Cornford said, “We have seen a typical slowdown in activity over the holiday period although activity has picked up with fresh listings and well-attended open homes since Wellington Anniversary Weekend.”
“A lack of housing supply, coupled with a recent increase in population, continues to put upwards pressure on values. This tight supply is creating strong demand for vacant land and new builds – particularly in the outer Wellington regions including Churton Park, Grenada and Aotea.”
“We’re also seeing strong competition in the 1-1.5 million dollar range for family homes, particularly if the property is well presented and situated in a popular suburb such as Karori or Khandallah.”
“Finally, from an investment point of view, yields have started to creep up. This is a result of both higher rents and investors demanding higher returns now that value growth has slowed.”
“I’d anticipate moderate value growth throughout 2018. The government is likely to further grow its workforce over the coming months, which should further increase demand and prices.”
“At the same time, investors are weary of the uncertainty around the Healthy Homes Bill. The prevalence of Wellington’s older villa housing, particularly in the city fringe suburbs such as Aro Valley, Kelburn and Mt Victoria, mean many investors may face high costs getting their property up to the required standards. I’d anticipate these increased costs to be passed onto the tenants in the form of higher rents.”
“The surge in rents we have seen over the last three months is likely to motivate renters to enter the housing market and I’m expecting to see a strong presence again from first home buyers over 2018, particularly if LVR restrictions are eased further.”
Nelson residential property values continue to increase, rising 9.9% or $50,244 year on year from an average value of $508,343 in January 2017 to $558,587 in January 2018. Values rose 1.3% over the past three months.
Meanwhile, values in the Tasman District have also continued to rise, up 12.6% or $62,796 year on year from an average value of $498,111 in January 2017 to $560,907 in January 2018. They increased 2.6% over the last three months.
QV Nelson Property Consultant Craig Russell said, “The Nelson/Tasman property market has seen an increase in market optimism over recent weeks compared with a rather cautious approach over the latter stages of 2017. There is a continuation of strong demand for well-maintained properties, particularly those valued at up to $700, 000.”
“From an investment perspective, yields have decreased in recent years. This is due to the fact that home values have increased at a faster rate than rental levels. However, this is offset by an increase in rental levels over the summer period as demand exceeds supply – which is putting some upward pressure on rental yields.”
Christchurch City values have dropped slightly, down 0.6% or $3,080 over the past year from an average value of $497, 539 in January 2017 to $494,459 in January 2018. However, values have increased slightly by 0.8% over the past quarter.
Meanwhile, growth remains relatively flat across Canterbury’s regions. The Waimakariri District is up 0.7% year on year although its value has remained unchanged over the past three months; while Selwyn values are down 0.1% year on year although they are up over the past three months.
QV Christchurch Senior Consultant, Daryl Taggart said, “It’s very much a continuation of last year’s theme in the Christchurch market. A high supply of housing stock and a lack of demand are driving low value growth.”
“In saying this, we are seeing that those properties, which have managed to generate a good deal of prospective buyer interest have sold very well. There are also some positive developments and projects being completed in the city, which is encouraging.” 
It’s very much a continuation of last year, as Dunedin City continues its market growth. Values rose 9.3% over the past year from an average value of $359,055 in January 2017 to an average value of $392,512 in January 2018. Values also increased 2.6% over the past three months. 
QV Dunedin Property Consultant, Aidan Young said, “The market has continued its positive growth, with impressive turnouts at open homes and relatively high sales prices. The First Home Buyer market remains buoyant, due to a comparatively low entry level price point. We’re also seeing plenty of sales activity at the upper end – around the one million dollar mark – which again reflects a good level of confidence in higher priced homes.”
“There is currently significant demand for vacant land, so we’re continuing to see competitive prices for sections across the city. These prevailing market conditions are also causing rental prices to increase, which may be attributed to potential buyers being required to stay in rental properties longer until they can find/afford to enter the market.”
“Given the current trends and activity in the market, I am not anticipating major changes to recent trends throughout this year. I’d anticipate market activity to pick up as we emerge out of the holiday period and buyers settle into last year’s change of government and the banks' easing their lending criteria."
Other Provincial centres
The growth in values across many smaller provincial centres in the North Island continues. Over the past three months, there were notable value increases in Whanganui, South Waikato, Waitomo, Opotiki, Rangitikei and Carterton among others. Meanwhile, it’s been a strong year of growth north of Auckland, with Whangarei and Kaipara both experiencing annual increases of value of 10% and 9.2% respectively.
In the South Island, regional centres including Grey, Waitaki, Clutha and Southland have experiencing notable value increases over the past quarter. Most notably, Mackenzie continues its significant growth up 10.3% over the past three months and 27.1% since January 2017. Finally, growth in Queenstown Lakes has dropped slightly to 2.2% over the last three months although growth remains very strong over the past year.
You can access the latest QV House Price Index here.

Tags: Property, CoreLogic, Auckland, Wellington, Housing, Real Estate, Property Market, Buying