Treat biggest cities as separate markets: Report

Auckland and Christchurch need to be seen as their own, separate property markets and national data should be treated with caution, the Department of Building and Housing’s latest quarterly update says.

Wednesday, June 11th 2014, 12:00AM

by The Landlord

The New Zealand Housing and Construction Quarterly provides data and analysis on the housing market, construction and social housing. The June report was released this week.

It said much of the discussion about the “overheated” New Zealand property market was focused on the two largest cities.

“While it makes sense to focus on the areas of the country with the most significant housing issues, there is a risk that focusing too much on a couple of markets can create a misleading picture of what is happening around the country.”

National price data was heavily influenced by Auckland, the report said, and that could lead to people drawing conclusions about the country as a whole, based on a misleading picture.

“In April 2014, the top four Territorial Authorities by annual price growth were Auckland (14%), Waimakariri (8%), Christchurch (8%) and Selwyn (8%)… while the four Auckland and greater Christchurch TAs aren’t always the top four, they have consistently featured there over the last 12 months. This suggests Auckland and Great Christchurch have their own price dynamic that is completely different from that of the rest of the country. Rather than just being the fastest-growing part of a national market, they really need to be seen more as a market on their own, with their own dynamics. So long as this situation persists, national aggregate data will have to be treated with caution.”

There were only six other regions that had experienced annual growth of more than 5%. About 15 were still showing price declines.

The report showed less difference when it came to rents – between December 2013 and March 2014, Christchurch rents increased 3%, Wellington’s were up just over 2% and Auckland’s were steady.

It said Christchurch rents would reach Auckland levels by the end of the year on current trends.

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