New Zealands average home value tops $600,000 as values soar

Date: 02 August 2016

The latest monthly QV House Price Index shows that nationwide residential property values for July have increased 14.1% over the past year. Values rose by 6.1% over the past three months and are now 45.4% above the previous market peak of late 2007. When adjusted for inflation the nationwide annual increase drops slightly to 13.7% and values are now 23.5% above the 2007 peak. The average value nationwide has now ticked over the $600,000s and is $602,434.

The Auckland market has increased 16.0% year on year and 5.2% over the past three months. Values there are now 81.6% higher than the previous peak of 2007.  When adjusted for inflation values rose 15.5% over the past year and are 54.2% above the 2007 peak. The average value in the Auckland is now $992,207.

 

QV National Spokesperson Andrea Rush said, “The latest QV House Price index shows values continue to rise rapidly in many parts of New Zealand buoyed by low interest rates, strong investor activity and high net migration with the average value nationwide now topping $600,000.”

“Hamilton, Queenstown Lakes and Tauranga have seen some of the highest growth with Hamilton values rising 31.5% since July 2015, nearly twice as fast as Auckland which rose 16.0% over the same period.”

“The Auckland market however has continued to accelerate up more than 5.0% over the past three months and it now has an average value just shy of $1 million dollars.”

“Meanwhile, the Wellington and Dunedin residential property markets also continue to show strong growth. Christchurch by comparison is showing much more moderate value growth and along with supply meeting demand for homes in the city, there’s now an over-supply of rental properties which is resulting in a downward trend in rents there.”

“It’s too soon to tell what impact the Reserve Bank’s new 40.0% deposit requirement for anyone purchasing a property they do not intend to live in, will have on the market. However there are reports the new rules have already led to some offers being withdrawn by investors in parts of the country.”

 

Auckland

Home values across the Auckland region are continuing on the rapid upward trend seen since April.

The former Auckland City Council central suburbs have increased by 14.6% over the past year and a huge 5.6% over the past three months .The average value there is now $1,163,464.  Values in the former North Shore City suburbs were up by 15.1% year on year and 5.3% over the past three months. The average value there is now $1,160,094.

Manukau city continued to see very strong value growth over the past year with values there rising 20.0% year on year and 5.7% over the past three months, the average value there is now $859,005. Value growth in Waitakere city by comparison appeared to be slowing down a little with values there rising below the Auckland average, up 13.8% year on year and 3.7% over the past three months. The average value in the western suburbs is now $782,039.

To the north of Auckland, values in Rodney District rose by 16.0% over the past year and 2.8% in the past three months. Papakura District values rose by 21.1% in the year to July 2016 and were up by 4.9% over the past three months, while in neighbouring Franklin values rose 15.1% over the past on year and 3.3% over the past three months.

QV homevalue Registered Valuer, James Wilson said, “Throughout July, the Auckland residential market has been characterised by a severe shortage of listings which could be due to fewer people listing their properties for sale during the wet winter months and strong value growth.”

“This seasonal shortage of listings has further strengthened demand for good quality stock and homeowners appear to be favouring staying put for the time being and utilise the equity within their property to fund renovations rather than selling to upgrade.”

“Increasingly we are witnessing unconditional offers being made in order to secure a property without completing adequate due diligence. This behaviour is driven by a growing fear of missing out which is rife across the market.”

“Whilst it is still too early to have evidence of the market impact of the further strengthening of LVR restrictions announced by the Reserve Bank during July, some investors have said they are entering a ‘wait and see’ holding pattern.”

“Given the LVR strengthening, and Reserve Bank rhetoric regarding the potential of Debt to Income ratios, we would urge investors to conduct adequate analysis of the long term investment returns that any potential property can achieve.”

“The Super City southern boundary fringe districts of Papakura and Franklin are still popular among investors given the relatively strong gross returns achievable compared with more central Auckland areas.”

“Lifestyle properties are increasingly popular as buyers seek to obtain the added utility of a larger land area; those localities which are relatively well serviced and provide good access to arterial routes are experiencing the strongest demand - examples include Karaka, Clevedon, Drury and parts of Franklin.”

 

Hamilton 

Home values across Hamilton City continue to show massive growth, up 31.5% since July 2015 and a huge 8.9% over the past three months. The average value in the city is now $513,094. Values in the surrounding districts also continue to rise rapidly with Waikato District values up by 27.5% year on year and 4.2% over the past three months and Matamata-Piako District up 24.3% year on year and 7.3% over the past three months.

QV homevalue Hamilton Valuer, Stephen Hare said, “Hamilton City property market is currently experiencing strong demand and the supply of properties on the market is still not currently able to keep up with demand.”

“We are continuing to see strong demand for properties in the lower value price bracket ($400,000-$600,000) and increasingly strong demand in the high value bracket suburbs such as Flagstaff, Rototuna and Huntington.”

“It’s becoming a growing occurrence in this strong market for properties to go to auction compared to other means (asking price) with vendors seeking higher values through this approach.”

“Hamilton home buyers and investors continue to purchase in nearby towns within commuting distance to the city, which is driving values up in places such as Te Awamutu, Morrinsville and Ngaruawahia which are becoming more appealing to first home buyers seeking affordability and close proximity to Hamilton.

“Raglan is experiencing an increase in property values similar to the rest of the Waikato district and the Hamilton market.”

“First home buyers, outside investors, local investors, other locals and holiday home buyers are all vying for properties in the popular coastal town and demand for property there is exceeding supply which is driving values up there.”

“Raglan is only 45 minutes commuting distance to Hamilton making the coastal community popular for first home buyers, families and retirees wanting the coastal lifestyle, affordability and to commute for work in Hamilton.“

 

Tauranga

Home values in Tauranga City continue to rise rapidly up a huge 25.7% year on year and 6.6% over the past three months. The average value in the city is $615,625. Western Bay of Plenty home values also continue to show strong growth rising 24.3% year on year and 5.9% over the past three months. The average value in the district is now $540,128.

QV homevalue Tauranga Registered Valuer David Hume said, “Buoyant market conditions continue in Tauranga and the Bay of Plenty residential property markets.

“Supply cannot keep up with demand for property and there are still a lot of desperate buyers competing to buy those homes and sections that are listed for sale on the market.”

“There continues to be a severe shortage of listings and a lack of vacant sections or land available on the market.

“There is continued strong demand from local and out-of-town investors for property. We are also still seeing high numbers of people relocating to Tauranga including New Zealanders returning from overseas, people moving from Christchurch due to the earthquakes and people priced out of the Auckland market.

“First home buyers are continuing to find it very hard to enter the market and those who can manage to purchase a home, are having to drop their expectations to get a foot in the door.”

“Over the past six months it’s also become increasingly difficult for people looking for homes to rent and renters have to act quickly and compete with others to secure a property to rent while rents are rising rapidly across in the city.”

 

Wellington   

The QV House Price Index for the entire Wellington region shows home values rose 14.4% year on year and 5.5% over the past three months and values across the region are now 15.0% higher than in the previous peak of 2007. The average value across the wider region there is now $524,063.

Home values in Wellington City suburbs continue to rise rapidly up 15.9% year on year and 5.7% over the past three months. The average value there is now $633,611. Lower Hutt rose 12.2% in the year since July 2015 and 4.6% over the past three months while Upper Hutt values were up 10.6% year on year and a huge 6.0% over the past three months; Porirua also 12.6% year on year and 4.7% over the past three months and the Kapiti Coast was up 12.4% year on year and 5.2% over the past three months.

QV homevalue Wellington Registered Valuer, David Cornford said, “The residential property market has continued to gain momentum in Wellington City, Porirua and the Hutt Valley over the past month.”

“While it’s too early to say how much impact recently announced loan restrictions will have on the market. There have been some instances of “panic buying” with some auctions seeing a surge in the number of registered bidders as buyers try to use pre-approved finance before stricter minimum deposit requirements take effect.”

“A recent auction in Titahi Bay attracted twenty six registered bidders which is more than three times the typical number of bidders for a property in this location”

“A recent auction for a three bedroom home in Newlands attracted 52 registered bidders; the largest number of registered bidders seen in the Northern suburbs in over 8 years”

“A severe shortage of stock on the market and historically low interest rates means that there are substantially more purchasers in the market than sellers and we are seeing record sale prices as a result. There’s also been an increase in the number of sales achieving more than two million dollars.”

“First home buyers continue to look further afield in order to secure a property with outer fringe areas of Porirua, the Hutt Valley and South Wairarapa all being popular with first home buyers who have been priced out of the Wellington City market.”

“Residential rents have shown upward movements in most areas of Wellington however rents are increasing at a slower pace than property values.”

 

Christchurch

Home values in Christchurch City increased 3.5% year on year and 0.7% over the past three months and they are 29.7% higher than the previous peak of 2007. The average value in the city is $492,165. Values in the Selwyn District rose 3.0% year on year but are showing a slight decrease in values over the past three months, down 0.2%.”  

QV homevalue Christchurch, Registered Valuer Damian Kennedy said, “The Christchurch market remains slow and steady with a shortage of listings on the market, beyond the normal reduction in listings which is typical during the colder winter months.”

“There are still a lot of new homes being built and these appear to still be selling however we are seeing some asking price reductions.”

“Market rents have been on the decline for some time now across the city now that demand for rentals has slowed with fewer workers here for the rebuild and fewer people having to rent while their damaged homes are repaired.”

QV is also reminding Christchurch property owners that if their properties have unrepaired damage they are asked to complete an online survey so this can be taken into account in the Christchurch City Rating Revaluation being carried out this year.  The survey is can be downloaded or completed online by clicking the link on www.ratingvalues.co.nz

 

Dunedin

The Dunedin city home values continue to rise in a solid upward trend and values are now 11.1% higher than in July 2015 and have risen 4.5% over the past three months. The average value in the city is now $331,967.

QV homevalue Dunedin Registered Valuer, Duncan Jack said, “The Dunedin market remains buoyant with good levels of sales activity and a shortage of listings for sale on the market. “

“Demand remains strong across the city and across value ranges with modernised properties achieving particularly good sale prices”

“It appears vendors’ sale price expectations are and this, along with strong competition and demand from buyers for the limited number of properties available on the market continues to drive home values up.”

 

Hawkes Bay

Napier home values continued to show strong growth increasing by 15.1% over the past year and 4.6% over the past three months. The average value in the city is now $379,698. While Hastings values also continue on an upward trend rising 14.1% in the year to July and a huge 6.2% over the past three months. The average value there is now $353,255

QV homevalue Hawkes Bay, Registered Valuer Bevan Pickett said, “The market is still seeing strong demand and upward trends in values.  There are some mixed feelings about how the new LVR restrictions announced by the Reserve Bank will impact the market.”

“There continues to be a lot of optimism in the housing market with a decent section of the market likely to continue unaffected.” 

“We have heard of some offers falling over due to buyers having difficulty getting finance with the banks obliged to operate under the new 40% deposit rules for investors already.”

“There remains a severe shortage of stock on the market and investors are buying up properties in lower quality housing areas that were not getting much interest from buyers until last year.  These entry level localities have seen significant recent value growth.  There is also a shortage of housing available in the rental market.

“The lack of stock available to buy or rent means homeowners have to ensure they have organised their next step if they are selling their home to avoid being left with limited options.”

“We are seeing examples of lower quality housing stock, which failed to sell when the market was quiet, coming back onto the market and selling relatively quickly now the market is much more buoyant.”

“There are a lot of potential purchasers looking to enter the market and ride the potential capital gains or make potential profit. Investors and out of town purchasers remain a feature of the market that are adding to its apparent strength.”

 

Nelson

Nelson home values have increased by 12.0% since July 2015 and 3.1% over the past three months. The average value in the city is now $464,885. The Tasman District also increased by 8.2% over the past year and 2.5% over the past three months and the average value in the district is now $457,542.

QV homevalue Nelson Registered Valuer Craig Russell said, “Prices remain firm for well-presented properties close to good schooling and shopping centres.”

“The reserve bank’s recent announcement of stricter loan to value ratios for investors is likely to have some impact on the local market but may be partially offset by pent up demand from buyers, and also a probable fall in interest rates coming into spring.”

“We are now seeing sales of some properties that have been on the market for lengthy periods of time. This is likely a result of over inflated vendor expectations being caught up by rising house prices.”

“We appear to entering a phase in the market where we are seeing some opportunist pricing by vendors and there may be an element of panic buying by some purchasers that may be caught out without doing the proper due diligence.”

“There were approximately 950 properties available for sale on Trade Me in the Nelson/Tasman regions this time 12 months ago. There are now only approximately 500 properties available for sale.”

“The lack of supply is exacerbated by strong demand for property with cheap borrowing and sales volumes up over the same period.”

“New houses that are well designed to meet market requirements are selling above land and building costs with potential profits being made.”  

 

Other Provincial centres

In the North Island, most areas saw values rise with the only place to see a drop in values was Wairoa District near Gisborne. Other central north island regions have seen values soar: Kawerau was up the most, rising 41.0% year on year; Otorohanga District rose 29.0%, while Rotorua was up 24.8% over the same period.

In the South Island, the clear leader is the Queenstown Lakes District rising 27.0% since July 2015 and 8.1% over the past three months; values in nearby Central Otago are also on the rise up 18.3% year on year and 6.6% over the past three months. The Invercargill market is also on the rise after a long period of being quite flat, with values in the city up 7.8% year on year and 2.7% over the past three months.  Banks Peninsula and the Selwyn District in Christchurch along with Waimate, Clutha and Westland Districts were the only places to see values drop over the past 3 months.

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