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The latest monthly QV House Price Index shows nationwide residential property values for March increased 7.3% over the past year which is the fastest rate since June 2017. Values rose 1.2% over the past three months. The nationwide average value is now $677,618. When adjusted for inflation the nationwide annual increase drops slightly to 5.6%. 
 
Meanwhile, residential property value growth across the Auckland Region increased slightly by 1.0% year on year and values also ticked up slightly by 0.4% over the past quarter. The average value for the Auckland Region is now $1,055,992. When adjusted for inflation values dropped 0.6% over the past year.                                  
 
The full set of QV House Price Index statistics for all New Zealand for March can be downloaded by clicking this link: QV House Price Index March 2018 
 
QV National Spokesperson Andrea Rush said, “Residential property value growth remains subdued compared to recent years but March has seen the usual seasonal pick-up in sales volumes and activity.”
 
“This has seen nationwide annual value growth rise to 7.3% which is the fastest rate in nine months but sales volumes are still lower than usual for March.”
 
“Of the main centres Dunedin leads the way with annual growth of 9.4%, while the Auckland and Christchurch housing markets have seen little value movement over the past year.”
 
“Annual value growth across the Auckland Region has slowed from 12.3% in March 2017 to just 1.0% in March 2018 and Christchurch is down 0.6% over the past year.”
 
“The rate of growth has also slowed in the Wellington region from 21.2% in March 2017 to 8.2% in March 2018.”
 
“The Tauranga and Hamilton markets are still rising but again at much slower rates than the previous two years.”
 
“It’s the regions that continue to see the highest value growth driven by demand from people looking for more affordable homes or investment properties outside of the main centres.”
 
“The highest quarterly growth was seen on the East Coast settlement of Opotiki where values rose 16.1% in the first quarter of the year.”
 
“With restrictions on finance being eased by the retail banks it’s been a little easier for some investors and home buyers to gain finance to purchase.”
 
“First home buyers appear to be capitalising on subdued investor activity and some are finding they can purchase more easily without the same level of competition from multiple property owners if they are not already priced out of the market.”
 
Auckland
The Auckland market remains stable with any value changes relatively small. North Shore values rose the most, up 2.9% in the year to March and 0.8% over the past three months and the average value there is now $1,235,905. The former Auckland City Council central suburbs rose 1.2% year on year but were down 0.1% over the past three months and the average value there is now $1,244,218. Waitakere values were down 0.5% year on year but increased 0.1% over the past three months; Manukau rose 0.3% year on year and 0.8% over the past three months; Papakura values increased 1.9% year on year and 0.9% over the past three months and the average value there is now $703,258; Franklin values also rose 1.2% year on year and Rodney values were also up 1.0% year on year.
 
QV Auckland Senior Consultant, James Steele said, “Buyer activity has picked up in the entry level price brackets across the region and there’s been an increase in the number of sales being finalised during March.”
 
“We are still seeing the trend of well-presented and located properties continuing to sell well but homes with any issues, outstanding maintenance or that may lack sun not selling easily and tending to sit around on the market for longer and in general properties are taking longer to sell.”
 
“First home buyers have been more active in the market and they are taking advantage of less competition from investors and also lower deposit schemes being offered by banks.”
 
“The new build markets in areas such as Flat Bush and Hobsonville Point are also selling a little better than they were but there has been some discounting in these developments.”
 
Hamilton  
Hamilton City home values rose 2.2% over the past three months signifying a pick up in the market over the past couple of months and values increased 4.3% in the year to March. The average value in Hamilton is now $555,549.
 
QV Hamilton Property Consultant, Andrew Jaques said, “It would appear that the market has bounced back from any quiet period we observed in December through to January with the number of sales and the number of listings slightly higher than this time last year.”
 
“In particular there have been a high number of sales in the city’s Northern suburbs such as Flagstaff and Rototuna and value growth has been stronger there over the past two months rising 4.4% in the first quarter of the year.”
 
“With more homes available for sale, buyers are feeling less urgency to purchase as soon as possible and this is placing less upwards pressure on prices.”
 
“The number of million dollar plus homes sold within Hamilton City has reached an all-time high, and agents expect this trend to carry on throughout 2018.”
 
“Despite the median house price in Hamilton remaining strong, investors still lack the confidence in the marketplace, and this is evident when they are off-loading rentals as opposed to investing further.”
 
“Rental demand remains very high. The competition to find rentals is not so much seen by the students, but more so families looking for three-four bedroom homes.”
 
Tauranga
Tauranga home values rose 4.5% year on year and 1.9% over the past three months. The average value in the city is $706,922. The Western Bay of Plenty market rose 8.0% year on year and 2.3% over the past three months. The average value in the district is now $637,801.
 
QV Tauranga Property Consultant, Steven Dunn said, “Activity has increased in the Tauranga market during February and March however buyers no longer appear to have that fear of missing out and are taking more time over making decisions.”
 
“Despite there still being a shortage of listings in areas like Mount Maunganui people are not jumping in and are doing more due diligence and looking at the market and seeing what’s happening with values before making offers.”
 
“Prices in many areas including the popular Otumoetai have stabilised quite a bit with not much movement in values over the past few months.”
 
“First home buyers are active and are finding it easier to purchase now there’s less competition from investors.”
 
“It’s also easier for buyers to gain finance approval now that it’s more possible to get lower deposit loans and retail banks have eased back on the strict lending criteria of the second half of 2017.”
 
“We are still seeing the trend of people moving from major centres like Auckland and Wellington to Tauranga and the Bay of Plenty.”
 
Wellington   
Values across the whole Wellington Region rose 8.2% in the year to March and 2.6% over the past quarter and the average value is now $644,567.
 
Wellington City values increased 7.2% year on year and 1.5% over the past three months and the average value there is now $768,108. Meanwhile values in Upper Hutt rose 9.1% year on year and 2.8% over the past three months; Lower Hutt rose 7.2% year on year and 1.5% over the past quarter; Porirua rose 7.4% year on year and 1.6% over the past quarter and Kapiti Coast saw the greatest annual increase in the region with values there rising 13.8% year on year and 0.7% over the past three months.
 
QV Wellington Senior Consultant, David Cornford said, “There is still plenty of activity in the Wellington market though value growth continues to slow and it feels like we are starting to enter a period of stable property values after a couple of years of strong growth.”
 
“There is strong demand for property under the $700K mark and in particular for anything under $500K as first home buyers are a strong presence in the market in suburbs such as Porirua and the Hutt Valley where you can still find homes in this price bracket.”
 
“First home buyers are very active in the market, particularly in the Hutt Valley and Porirua where many are taking advantage of the Kiwisaver HomeStart grant, capped at $500,000 for existing dwellings and $550,000 for new dwellings. This segment of the market there is particularly strong”.
 
“Well-presented and located homes continue to attract a good amount of attention and are selling well and there is solid demand for vacant land and new builds.”
 
“The investor market remains relatively flat due to higher deposit requirements, lower promise of capital growth now prices are stabilising and the Healthy Homes Bill on the horizon”.
 
Christchurch 
Christchurch city values continue to be relatively stable with any value changes only slight. Values dropped slightly by 0.6% year on year and rose 0.1% over the past three months. The average value in the city is now $494,117.
 
QV Christchurch Property Consultant Hamish Collins said, “The Christchurch market is still slow and steady and that’s what we expect to see now for the medium to long term.”
 
“It’s taking 10 days longer on average for properties to sell from this time a year ago and with supply exceeding demand buyers are able to be more picky than in previous years as there is no foreseeable growth and buyers are being conservative.”
 
“Vendors’ expectations are often higher than the reality of what they can get on the market and agents are conditioning accordingly to get the sale or the homes are withdrawn and held.”
 
“First home buyers remain active with particularly new builds where there are greater government contributions under the KiwiSaver Home Loan grants”.
 
“There is plenty of activity in the lower end of the market for homes selling for between $350k and $500k. Whereas properties marketed at over $600k are taking longer to sell because there are more homes at this level on the market and less buyers who can purchase at this level.”
 
“There is an oversupply of homes in the top end of the market as well priced at above $800k to over $1 million.”
“Investor finance is becoming easier to get but they are still finding the 35.0% deposit is making things difficult.”
 
“Some developers are finding they need to drop asking prices to sell units in order to have funding ready for the next development they have already committed to.”
 
“Often we are seeing low sales which can be explained by developers or renovators taking a hit on price to get a quick sale in order to move onto next project.”
 
Dunedin
Dunedin residential property values are continuing to rise and have increased 9.4% in the year to March and 1.8% over the past three months. The average value in the city is just shy of $400,000 and is sitting at $398,120. Dunedin – Taieri saw the strongest growth with values up 9.7% year on year and 4.2% over the first quarter of the year. The average value there is now $415,844 contributed to by the larger number of new builds in this area.
 
QV Dunedin Property Consultant, Aidan Young said, “The mid to upper end of the market is seeing good levels of activity with out of town investment remaining consistent in addition to local buyers selling and moving up the property ladder.” 
 
“Deadline tenders are becoming a more prevalent way to sell, indicating that people need to put there best foot forward with their offers.”
 
“As we move toward winter it’s a typically quieter time of year in the Dunedin housing market so it will be interesting to see if the sale volumes remain stable throughout the colder months.”
 
“It appears that activity has already slowed during March than during the first two months of the year so this trend may continue throughout autumn and through winter.”
 
Nelson
Nelson residential property values continued to see moderate growth rising 8.4% in the year to March and 2.0% over the first quarter of 2018. The average value in the city is now $566,052.  Meanwhile values in the Tasman District have also continued to rise, up 9.7% year on year and 1.2% over the past three months. The average value in the Tasman district is now $562,614.
 
QV Nelson Property Consultant Craig Russell said, “We have seen a continuation of strong demand across the region particularly for entry level homes popular with first home buyers and multiple offer situations still commonplace.”
 
“Demand for executive type new or near new housing in the $750,000 to $900,000 price bracket has slowed slightly over the past few months with these properties often requiring an extended marketing period.”
 
“This is likely due to affordability becoming more of an issue with house price inflation increasing at a faster rate than wage growth.”
 
“Section prices continue to increase with pent up demand in developing subdivisions pushing prices up.”
 
“Flats and low maintenance homes in The Wood continue to be sought after and are popular with retirees given its handy location close to the city centre and amenities.”
 
“Nelson South and Washington Valley are also popular locations for first home buyers and investors given their relative proximity to the city centre but also because these locations generally comprise of entry level housing which provides superior yields.”  
 
Hawkes Bay
Values continue to see strong growth across the Hawkes Bay region. Napier values rose 17.6% year on year and 4.1% over the past three months. The average value in the city is now $497,562. Hastings values are also continuing to rise up 14.7% year on year and 2.7% over the past three months. The average value there is now $457,145. The Central Hawkes Bay has also seen values jump 25.9% year on year and 9.4% over the past three months and the average value there is now $327,971.
 
Provincial centres
In the North Island, many provincial areas continue to see strong value growth while others have seen values drop.  The Central Hawkes Bay saw the strongest annual growth rising nearly 26.0%; South Wairarapa has also seen very strong growth up 24.4%; while Opotiki has seen the strongest quarterly growth with values there rising 16.1% in the first three months of this year and 24.0% year on year. Values dropped in a number of places including some parts of Auckland, Wairoa, South Waikato, Waitomo and Tararua Districts.
 
In the South Island, most areas saw values rise with the strongest growth in the lower South Island as a flow-on from recent strong growth in Queenstown Lakes, Central Otago and Dunedin. Waitaki values rose 16.3% year on year and 5.5% over the past three months; Southland District rose 13.1% year on year and 3.3% over the past three months and Clutha rose 12.6% year on year and 5.7% over the first quarter of the year alone. Values decreased in most areas of Christchurch as well as in Buller and Hurinui Districts.
 
Have you sold a home before?
 
How did you choose your real estate agent? Did you go to one of their open homes? Trust a recommendation? Test how they treat prospective purchasers? Were you happy with the outcome? Did you feel confident in the process? Do you think your advertising spend was justified? 
 
CoreLogic is currently researching Kiwi perceptions about real estate agents, with a new survey focusing on understanding experiences when selling property and how well agents are meeting consumer expectations (or not).
 
The NZ survey builds upon research conducted by CoreLogic in Australia, which found that while real estate agents suffer generally from a poor public reputation, 66% of the vendors surveyed rated the overall experience of selling their home positively, with 31% claiming it was ‘excellent’ and 35% rating it as ‘good’. 68% of respondents would recommend their agent to friends or family. 
 
Kylie Davis, the Head of Content at CoreLogic comments: “What I’m really looking forward to understanding is how people judge whether an agent is really great or average. By capturing those insights, the industry can start to deliver more targeted training that encourages adoption of those behaviours.”
 
The Australian research identified that vendors wanted agents to provide better feedback throughout the sales process, to be accountable, friendly and approachable, to demonstrate how the sale price is determined and provide advice and feedback on how to best sell their home. “It will be interesting to see what the expectations of Kiwi sellers are and how they compare to what we’ve found across the Tasman.” Ms Davis said. 
 
If you’ve sold a home using an agent, we’d love to hear your thoughts. Everyone who completes the survey will go in the draw to win 1 of 5 $100 vouchers from their choice of Mitre 10, Countdown or New World*.
 
p.s. if you yourself are considering selling soon, here are some great tips on how to choose your agent, by some of the best in the business. 
 

 

*Prize draw terms and conditions apply and can be found here

 

 
The latest monthly QV House Price Index shows nationwide residential property values for February increased 6.5% over the past year and 1.2% over the past three months. The nationwide average value is now $672,645. When adjusted for inflation the nationwide annual increase drops slightly to 4.9%.
 
Meanwhile, residential property value growth across the Auckland Region increased slightly by 1.0% year on year which is the slowest annual rate since August 2017. Values also ticked up slightly by 0.8% over the past quarter. The average value for the Auckland Region is now $1,053,948. When adjusted for inflation values dropped 0.6% over the past year.
 
QV National Spokesperson Andrea Rush said, “Values continue to rise faster in Wellington, Dunedin and many regional centres than in Auckland.”
 
“The Hamilton and Tauranga markets have picked up in February after a sluggish start to the year while the Hawkes Bay continues to see some of the strongest value growth in the  North Island.”
 
“Christchurch is the only main centre to see values drop over the past year, while many regional areas of the South Island continue to see values rise including Nelson and Tasman, Central Otago and the MacKenzie District as well as Southland and Invercargill.”
 
“Low interest rates and the easing in the LVR restrictions has seen many more first home buyers active in areas where they can still afford to enter the market, while some investors also appear to be becoming more active now they need a slightly lower deposit.”
 
 
Auckland
 
The Auckland market remains mixed with some areas seeing values continuing to rise and others seeing values drop slightly. The former Auckland City Council suburbs rose 1.2% year on year but were down 0.2% over the past three months and the average value there is now $1,239,086. Waitakere values were down 0.8% year on year but they increased by 0.5% over the past three months. The average value there is now $825,362; North Shore values rose 2.9% in the year to February and 1.5% over the past three months; Manukau was flat at 0.0% change year on year, but values rose 1.3% over the past three months; Papakura values rose 2.3% year on year and 1.5% over the past three months and the average value there has now topped $700,000 and is sitting at $702,318; Franklin values also rose 1.6% year on year and Rodney values were also up 1.5% year on year.
 
QV Auckland Senior Consultant, James Steele said, “The market remains sluggish with values holding for the most part, with a lack of good quality listings on the market and lower than normal sales volumes for this time of year.”
 
“First home buyers remain active in the market and there is good demand for entry level housing stock. However, many are still finding it difficult to get the finance to purchase, with prices remaining high.”
 
“Properties that are not well presented, have outstanding maintenance or are damp or shaded for example are sitting on the market for longer. This is a change to when the market was very hot and everything was selling quickly.”
 
“Buyers appear to be more discerning and people are choosing not to sell as they are not guaranteed of being able to find anything else desirable in this market.”
 
“The rental market is very tight and rents have increased significantly in many areas over the past year, highlighting the lack of accommodation in the city.”
 
 
Hamilton  
 
Hamilton City home values rose slightly by 0.8% over the past three months signifying a recent pick up in the market and values increased 3.1% in the year to February. The average value in Hamilton is now $548,417.
 
QV Hamilton Property Consultant, Andrew Jaques said, “The market appears to have bounced back after the Christmas break, with an upswing in the number of houses for sale and the number of buyers.”
“Confidence has improved with first home buyers being particularly active.”
 
“Activity is being driven by the fact that Hamilton’s population has continued to grow and low interests rates appear to be making it easier for people to service mortgages.”
 
“With the Reserve Bank move to increase the cap on banks from 10% to 15% of lending to home buyers with a deposit of less than 20.0% has also made it easier for some to purchase with a smaller deposit.”
 
“There is strong demand for land in high density zoned areas where duplex and townhouse developments are possible.”
 
“There is also a shortage in rental properties throughout Hamilton and this is likely due to a number of reasons including that rents are out of synch with the dramatic increase in property value thus yields have diminished; also student numbers are up following the government’s new tertiary policies; and the LVR ratios still require 25.0% deposit for the purchase of existing houses for rental purposes which is too high for many investors.”
 
 
Tauranga
 
Tauranga home values rose 4.9% year on year and 2.8% over the past three months. The average value in the city has now ticked over $700,000 and is sitting at $706,825. The Western Bay of Plenty market rose 7.0% year on year but dropped back 0.6% over the past three months. The average value in the district is now $622,227.
 
QV Tauranga Senior Consultant, David Hume said, “With such a great summer, activity in the market was slow initially to take off after the holiday period.”
 
“However, during February the market has shown good activity, with reports of properties with little interest in late stages of 2017, now getting multi offers.”
 
“The easing of the Loan to Value restrictions has helped market activity as have low interest rates and the strong regional economy here.”
 
“Stock levels in the Mount Manganui area are very low, with the top end of the market there remaining very strong and a substantial amount of building activity happening at present.”
 
“The Western Bay of Plenty market is also still seeing plenty of activity with Te Puke housing in demand off the back of the Kiwifruit market achieving record highs.”
 
“Buyers include those priced out of the Mount and Papamoa looking for bigger houses out of the city and the new highway has also eased congestion.”
 
“It seems Tauranga has now grown from a town to a city and along with this we are seeing that school zoning is also becoming more important with more traffic meaning the desire to be closer to schools has become far more prominent.”
 
“Now schools zones like Mount Manganui, Omanu and Bethlehem are commanding huge prices an example of this is sections in Bethlehem that were selling for $500,000 near Bethlehem College are now fetching around $850,000.”
 
 
Hawkes Bay
 
Values continue to rise across the Hawkes Bay region. Napier values rose 16.5% year on year and 3.1% over the past three months. The average value in the city is now $488,236. Hastings values are also continuing to rise up 13.8% year on year and 2.0% over the past three months. The average value there is now $451,686. The Central Hawkes Bay has also seen values jump 22.1% year on year and 8.1% over the past three months.
 
QV Napier, Senior Consultant, Philippa Pearse said, “The Hawkes Bay market remains buoyant with strong value growth continuing.”
 
“Investors are still active and include baby boomers looking for rental properties, or buying for family who can’t afford to get in on their own, or ahead of family moving back into the area from other areas or overseas.”
 
“There is also strong activity from first home buyers and investors in the lower valued areas of Napier and Hastings such as Akina, Mahora, Maraenui and Flaxmere where you can still purchase homes under $400,000 particularly from those looking to take advantage of the government grant and KiwiSaver."
 
“Central Hawkes Bay has seen value growth of more than 20.0% over the past year mainly due to increased demand from lower income families priced out of Napier and Hastings who now have to look further afield to more affordable homes.”
 
 
Wellington  
 
Values across the whole Wellington Region rose 8.6% in the year to February and 3.1% over the past quarter and the average value is now $640,737. Wellington City increased by 7.6% year on year and 1.9% over the past three months and is the average value there is now $764,020.Meanwhile values in Upper Hutt rose 8.5% year on year and 1.0% over the past three months; Lower Hutt rose 7.7% year on year and 0.5% over the past quarter; Porirua rose 9.6% year on year and 2.1% over the past quarter and Kapiti Coast saw the greatest annual increase in the region with values there rising 13.9% year on year and 1.5% over the past three months.
 
QV Wellington Senior Consultant, David Cornford said, “The Wellington market is still seeing plenty of activity although the rate of value growth has slowed a bit.”
 
“There is a lack of supply in the market particularly in Wellington City itself and Porirua, which is keeping prices up for those properties that are selling on the market.”
 
“However, the Hutt Valley is a bit flat but first home buyers remain very active accounting for 42.0% of sales in Lower Hutt and in 30.0% of all sales across the Wellington region so they are a big portion of the market.”
 
“Investor activity is pretty flat at the moment and yields have increased slightly due to strong rent growth and less promise of quick capital gains.”
 
“There is a shortage of rental property and this has driven rents up and it’s become very difficult to get a flat with potentially 20 or 30 or more people competing for the same property.”
 
“In many cases, before landlords even advertise their property for rent they are receiving enquiries from people desperate to find accommodation. A number of flats are renting without even being advertised.”
 
 
Christchurch 
 
Christchurch city values continue to be relatively stable with values down slightly by 0.8% year on year and up 0.1% over the past three months. The average value is sitting at $494,563.
 
QV Christchurch Senior Consultant Daryl Taggart said, “These statistics confirm what we are seeing in the market which is that we are currently experiencing a period of low growth which has been a continuation of the same theme over the past 12-18 months.”
 
“In saying this, properties are still selling but we’re just not seeing an increase in values.”
 
“So far we’ve noticed no significant changes in activity from home buyers or investors since the easing of the LVRs in January.”
 
 
Dunedin
 
Dunedin residential property values are continuing to rise and have increased 9.3% in the year to February and 1.7% over the past three months. The average value in the city is now $392,921. Average values in Dunedin- Central and North and Dunedin – Taieri are now more than $400,000.
 
QV Dunedin Property Consultant, Aidan Young said, “Strong demand for residential property remains in the Dunedin market.”
 
“Buyers are not doing due diligence in many cases as any they have a fear of missing out by making offers conditional upon this and while the variety of offers can be significant, its cash unconditional offers that are becoming more common.”
 
“All sectors of the housing market appear to be performing well from the low to high range and the market sentiment is positive with reports that open homes are being well attended and that many buyers are becoming frustrated on missing out on properties.”
 
 
Nelson
 
Nelson residential property values continued on their steady upward trending rising 10.5% year on year and 2.7% over the past three months. The average value in the city is now $567,767.  Meanwhile values in the Tasman District have also continued to rise, up 12.9% year on year and 2.3% over the past three months. The average value in the Tasman district is now $565,643.
 
QV Nelson Registered Valuer Craig Russell said, “There has been a continuation of strong but steady market demand in the Nelson region particularly for homes priced at first home buyers.”
 
“Multi-offer situations are still common for properties up to $550,000 with offer prices tending to be within a smaller range of each other.”
 
“Properties that have deferred maintenance or outstanding repairs are however being discounted in the current market as due diligence clauses make a return.”
 
“Lifestyle properties have seen a big increase in value over the past few years with there being a strong demand between Richmond and Motueka along the Coastal Highway.”
 
“New quality homes in Stoke and Richmond are now selling in the $750,000 to $950,000 price bracket.”
 
“Access to finance has been an issue for investors and has contributed to a drop off in investor activity in the Nelson region.”
 
 
Provincial centres
 
In the North Island, many other provincial centres continue to see stronger growth than is being seen in the Auckland region, particularly in areas closer to the Capital city such as in South Wairarapa where values jumped to rise up 23.2% year on year and 6.0% over the past three months; Masterton values were up 18.1% year on year and 2.8% over the past three months and Horowhenua where values rose 17.1% in the year to February and 2.6% over the past quarter. Meanwhile, nowhere apart from parts of Auckland saw values decrease over the past year although values were down in Kawerau, Stratford, Manuwatu and Tararua over the past three months.
 
In the South Island, the MacKenzie District continues to see a huge surge in growth with values rising 23.5% year on year and 8.1% over the past three months; Southland has also seen strong growth with values up 17.7% year on year and 4.9% over the past quarter and Invercargill values also rose 10.2% year on year and 3.2% over the past three months which is the strongest growth seen in the city since prior to the GFC.
 
Access the full set of February QV House Price Index statistics here.
 
 
If the NZ property market were a person, it will have dragged its heels back to work after a year of constant change, unrelenting pressure and left-field surprises.
 
Like all well intentioned self-improvers, it would have taken time over the summer break to reflect on the year that was, before embracing what’s coming next. And by all accounts, what a year 2017 was. 
 
It started hot on the heels of a major milestone ticking over:  the total value of all residential property in NZ passing the trillion dollar barrier. That’s a lot of value in one asset class and reinforces just how much property is an obsession here.
 
In early 2017 this was the lay of the land: 
  • The LVR restrictions had recently been tightened by the Reserve Bank of NZ. Heading into 2018, those restrictions have been loosened - albeit only marginally.
  • NZ had not long sworn in a new Prime Minister after John Key surprisingly stepped down in December 2016. Fast forward a year and once again we have a new Prime Minister in Jacinda Ardern, plus a whole new Government too.
The global audience was still getting its head around both the Brexit vote and Trump’s election victory and what it was all going to do for the world’s economy. Turns out that not too much impact was felt by NZ’s property market. 
 
Moving from politics back to property - despite a slowing of property values leading into 2017 there remained concern about prices increasing and the level of debt being incurred, especially by investors. Of course this was the main driver for the Reserve Bank tightening the LVR restrictions in late 2016 - lifting the minimum deposit requirement for investors to 40%.
 
From this point onwards we saw a sustained impact on property values, especially in Auckland. While previous LVR restrictions had only impacted the market short term, this time their effect was felt long term. They weren’t the sole reason for the slowdown though.
 
Mortgage interest rates had moved up past their record lows and slowly inched higher. But perhaps more crucially the retail banks were beginning to tighten up the purse strings, with tougher lending criteria and more stringent stress testing around the serviceability of mortgages.
 
This lead to sales activity getting significantly dented across the country but as the area with the most expensive property in NZ*, Auckland was the hardest hit. After enjoying the biggest growth over the previous four years, from April 2017 onwards Auckland’s sales volumes were consistently down 30%.
 
An increase in total listings meant more choice for active buyers, who were actually diminishing in numbers. This combination meant lesser reason for prices to rise, which contributed to the slowdown too.   
 
And then came winter. 
 
All the factors mentioned above contributed to it being a particularly freezing one for NZ’s property market, influenced further by the impending General Election.  From July we got bombarded with election advertising and endless policy debates - which added just a touch of uncertainty to the future. Initially National was very clearly in the lead, so the possibility of leadership change was minimal. But Jacinda Ardern quickly changed all that, with her promotion to the top job in August bringing Labour back into contention. Once again, people wondered about the property market’s future.
 
This was also when property investors started to struggle. Yield from investments had already significantly reduced, capital gains were drying up without sign of improvement, and securing funding was proving difficult. This trio of challenges meant mortgaged investors’ share of sales reduced to less than 25% (from a peak of 28%) nationwide. Remember that flow of Auckland investors into other regions as well?  It soon began to taper off too. 
 
While this was all going on, first home buyers were actually increasing their share of sales - although it’s worth noting that while all buyers were affected by the tightening of credit, it was investors affected the most. This meant the share of sales to first home buyers actually increased.
 
Property investors (or speculators to be more accurate) now find themselves under increased scrutiny from the new Government. The Healthy Homes Guarantee Bill passed in November, meaning improved standards for rental properties. About the same time foreign investors were also targeted, with foreign buyers soon to be effectively banned from buying existing property in NZ. So no respite in 2018 for some investors then, especially with expected tax changes to end the ability to negatively gear investment property and the extension of the Brightline test to five years to further ensure short term capital gains are taxed. 
 
Before the year was out we did see a very late spring lift in both sales activity and values in Auckland but then the summer break meant things came to a grinding halt. The NZ property market was busy panic buying at Kmart and fretting over whether to My Food Bag the Christmas lunch or not. We now won’t see a decent level of activity return from the summer lull until later this month.
 
So after all this, where did we end up? 
The statistics tell us that what it meant for Auckland was an overall value increase of 0.4% through 2017, but mixed results within the Super City; Auckland City finished up 2.2%, as did Papakura, but Waitakere ended the year down 1.9% and Manukau down 1.0% - easily the worst performing of our larger centres nationwide. Christchurch also finished the 2017 year below where it started, albeit by a very slim margin of 0.1%. 
 
Of the stronger performers, it was Dunedin that outpaced the rest of the ‘big 6’, realising a touch over 10% growth throughout the year. Wider Wellington (including Porirua and the Hutt) wasn’t far behind - rebounding from its early year slowdown to finish the year with 9.4% growth in values, with Porirua the pick of the bunch at 13.2% growth.
 
Meanwhile, Hamilton fared only slightly better than Auckland with 1.6% growth. Tauranga tried to get momentum again after hitting the brakes in early 2017 but couldn’t sustain it, ending the year up only 3.2%.
 
Outside our main six centres the best and worst were Masterton (19.6%), Horowhenua (16.5%) and Wanganui (15.1%) on top and Selwyn (0.3%), Waimakariri (1.7%) and Timaru (5.1%) at the bottom.
 
Now for that trillion dollar question …what does 2018 have in store?
Scanning across a few of the big influencers, net migration turned properly mid-way through 2017 after throwing a few dummy passes earlier to keep us all on our toes. It’s likely to continue to drop in 2018 as the Government reduces the in-flow of low skilled migrants and we start to lose Kiwis to Australia again (after gaining for the better part of the last two years).
 
Consumer confidence held up quite well through 2017 but is looking like its feelings are little bit hurt as we move into 2018. The weakness in the property market will be affecting that, but the strength of the labour market is holding it up, and that should remain relatively strong in 2018.
 
A major influencer on property values is mortgage interest rates. As has been well covered, a key part of those is the official cash rate which is tipped to stay on hold for 2018, but many economists are picking some upward pressure on mortgage rates due to the cost of funding for the banks.
 
So, plenty of macro-economic factors pointing to property demand remaining relatively constrained in 2018, but of course significant constraints on the construction industry remain, so supply will still lag. While there are ambitious Government targets to improve overall supply, particularly in Auckland, it’s unlikely that things will happen fast enough to massively improve the current demand/supply imbalance.
 
And don’t forget the research we released in the middle of 2017 which exposed that the actual increase in stock (6,000 units in 2016) is far behind those being consented (9,000 units in 2016). This is partly because the demolition of old properties to clear space for new properties isn’t taken into account with the ‘building consents issued’ measure.
 
So while building consents provide a high level health check of the construction industry, and they are trending upwards, they’re not always telling the whole story.
 
In Auckland we’ll probably see values remain relatively flat for most of 2018, barring a local or global economic shock. With more properties available, the fear of missing out has been removed - taking with it the previous upwards price pressure. People can once again save faster than the growth in property values (so waiting can actually pay off), plus it’s harder to secure funding…all adding up to constrained demand.  
 
Elsewhere we may see value growth continue a bit longer, particularly in Wellington and Dunedin where there remains a shortage of available listings and where the growth phase took a little longer to kick in than places like Hamilton and Tauranga. These centres will also likely see a period of consolidation as unaffordability starts to bite.
 
Christchurch is a city all on its own in terms of where it’s at in the property market cycle. It’s been more subdued throughout the last few years as it matures from the earthquake rebuild. There is still substantial development in the region, despite passing the residential construction peak. There are concerns of over-supply in some parts of the region but it doesn’t appear to be wide-spread, which should mean relative stability for 2018.
 
In our smaller centres, debate remains as to whether the strong growth of 2016/17 was actually warranted.  Some areas have benefitted from being in close proximity to larger centres, while others had stronger local economies to justify growth. Local knowledge is unbeatable in every case. But on the whole, migration to these areas has slowed: jobs drying up and value growth made property less affordable. So with the upwards pressure on mortgage interest rates having the same effect as anywhere in the country, it’s unlikely the strong recent growth will be sustained. 
 
So long story short, NZ’s property market may very well have concluded that it’s time to settle down for a year of re-evaluation and reflection, after a few spent living it up like a 20-something on their OE. 
 
- Nick Goodall, Head of Research - CoreLogic NZ
 
*Queenstown has surpassed Auckland as NZ’s most expensive centre when you look solely at average values, but given the size of Auckland, having such a high value is of far more significance than Queenstown which is unique in its economy being so heavily driven by tourism and is not what could be deemed typical of the property market in NZ.

 

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