Efforts to dampen housing market not working yet
Average Auckland house prices hit more than $1.3 million last month despite efforts by the Government to slow down the rampant housing market, Sally Lindsay reviews recent QV figures.
Tuesday, May 11th 2021, 1:33PM 
1 Comment
The latest QV House Price Index shows the average value nationally increased 8.9% in the past three months, up from the 7.8% quarterly growth in March.
The national average value now sits at $913,209, an increase of 21.4% year-on-year, up from 18.2% last month.
Auckland region’s average house prices are up 8.2% over the past quarter, with annual growth of 19%, up from March’s year-on-year growth of 16.1%.
Of the 16 major urban centres monitored, all except Napier City and Queenstown Lakes District are showing an increase in quarterly growth compared to last month.
Napier is still showing the strongest gains in value, followed closely by Hastings, with 14.2% and 14% respectively over the past three months.
QV general manager David Nagel says anecdotal evidence suggests investors are disappearing from auction rooms and there is even a drop in first-home buyer presence.
While fewer properties may be selling under the hammer, the majority are still being sold at prices that are at least as strong as before the Government announced changes to mortgage interest tax deductions and extension of the bright-line test, says Nagel.
“Guessing the impacts of the recent tax changes is fruitless until there is another couple of months of sales data to analyse.
“But there’s certainly an expectation that we’ll see at least a slowdown in the rate of value growth, with potentially fewer investors and maybe a few more first-home buyers entering the market over the coming months.”
Nagel said changes aimed at curbing investor activity in the housing market would come through in the June quarter figures.
He expected prices to continue to rise, but at a slower rate.
“The fundamentals of the market are still strong. We've got record low interest rates and a shortage of stock, but the demand is just so strong they've been snapped up.”
While there may be a softening in the market, prices would not fall, he said.
QV says some interesting regional trends are emerging, with the strongest value growth occurring in Hawke’s Bay, Manawatū-Whanganui and also greater Wellington.
Hawke’s Bay is leading the pack at 4.9% monthly growth. Meanwhile Otago and Southland are showing more conservative monthly growth of just 2.1% and 2.5% respectively
Auckland
The average house price is considerably higher in Auckland’s central suburbs ($1,524,149) and on the North Shore ($1,478,867).
Rodney ($1,200,127), Manukau ($1,152,181), Waitākere ($1,053,677), Papakura ($902,832), and Franklin ($840,173) have average house prices below the regional average.
The largest average price gain this quarter was in Papakura (10.4%) once again.
It was followed by Waitākere (9.6%), Rodney (9.4%), Manukau (8.6%), Franklin (8.4%), central Auckland (7.1%), and the North Shore (7.1%).
QV senior consultant Rupert Yortt says there has been little in the way of a slow down after last month's Government tax announcement. But adds the market does appear to be less frenzied now than it was earlier this year.
“Some buyers have adopted a ‘wait and see’ approach, which has resulted in a drop of buyers at open homes and auctions.
“This could potentially indicate the balance between vendor and buyer expectations may be switching slightly. Overall, the market should stabilise further as winter arrives.”
Yortt says properties with development potential continued to be the top performers throughout the region. While fringe central areas such as Avondale and Mt Wellington have also continued to attract strong levels of interest.
Northland
Whangārei’s residential property market was even hotter in April than it was the month prior, with the average house price rising 3.8% to $717,574.
That figure is now 10.4% higher than it was three months ago and a remarkable 23.4% higher than at the same time last year.
Even further north, house prices in the Far North District have increased by 8.1% in the quarter (up from the 7% last month) and by 17.2% over the past 12 months.
Meanwhile, property prices have increased by an average 19.6% in Kaipara since the same time last year.
Tauranga
Tauranga is still one of the country’s leading cities for rapid property market growth at present, despite some predictions it was slowing.
In fact, Tauranga’s average house price is rapidly closing in on $1 million.
At 7.8% growth for the quarter including 3% for the month of April it looks as though the city should reach that mark later this month.
As it stands now though, the average price of a home is currently $992,087.
Although confidence in the Tauranga economy remains strong, local QV property consultant Derek Turnwald says a number of factors will still likely slow the city’s rampant house price growth in the future.
“With the gradual removal of interest cost deductibility for investors it’s highly likely that investor interest will decline,” he said.
“Agents are receiving fewer enquiries from New Zealanders living overseas, possibly as a consequence of vaccine rollouts and increased confidence there is an end in sight to the worst effects of the Covid-19 pandemic.
“Plus there’s a sense that FOMO (fear of missing out) is being slowly replaced by a fear of paying too much for a property.”
Turnwald expects the central bank to implement additional controls and policy changes if recent changes are not effective in cooling the country’s overheated property market.
Waikato
The average price of a home in Hamilton is now $792,772 a significant 22.7% higher than at the same time last year.
House values increased by an average of 8% this quarter, which is only slightly higher than the 7.7% last month.
At 9.5% growth for the quarter, house prices in Hamilton’s north east have risen the most since February this year, followed by the south west (8.6%) and north west (7.7%).
The smallest house value growth was in Hamilton’s south-eastern suburbs (5.5%).
Across the wider region, Taupō has experienced the strongest three month increase with the average price rising 13.6% to $754,700.
This is 31% higher than at the same time 12 months ago. Waitomo has also seen a strong 12-month increase up 29.4% to $350,383.
Local QV property consultant Jarrod Hedley says agents are reporting good interest in residential properties across the region but not at the same levels as experienced earlier in the year.
“This is yet to have any impact on value increases in the Waikato.”
Rotorua
The average price for a home in Rotorua is now $663,642, 17.5% higher than it was at the same time last year, and 6.5% higher than it was just three months ago.
Residential property prices increased by an average of 3.2% in April, up from 0.9% the month before.
“Rotorua has become popular with local and out-of-town investors in recent years due to the comparative affordability of housing and high yields.
“However, it’s likely there will be even fewer rental properties available in Rotorua in the future because of the Government’s tax changes and this could lead to greater numbers of homeless people.”
Meanwhile, residential property listing periods are short, with most resulting in multi-offer sales.
Taranaki
New Plymouth’s residential property market remained red hot in April.
Its average house price increased by 9% for the quarter and 23.3% over the past 12 months to $636,439.
Meanwhile, house prices in the neighbouring districts of Stratford ($445,605) and South Taranaki ($398,793) have been even more buoyant, increasing by 24.3% and 33.2% respectively over the past 12 months.
Hawke’s Bay
New Zealand’s rampant housing market has been hottest in Hawke’s Bay this quarter, with house prices in Napier ($798,568) and Hastings ($797,034) surging by 14.2% and 14% respectively.
Annually, house prices have increased by a massive 32.3% in Hastings and 27.3% in Napier more than almost anywhere else.
QV graduate valuer Damian Hall says the Government’s new tax changes have yet to influence swelling value levels.
“The talk is investor interest has dropped but not enough to influence overall demand hence prices are still rising.”
Hall says during the winter months people’s attitude to hunker down and “wait until spring to sell” becomes apparent, putting pressure on supply levels and prices continue to rise further.
Palmerston North
Palmerston North’s residential property market shows no signs of slowing, with the average house price rising by 10.9% to $687,537. That value is a remarkable 30.8% higher than at the same time last year.
QV property consultant Olivia Roberts says the market is still strong with increases in property prices across the Manawatū region.
Sales volumes have been low and there is buyer panic in the market as a direct result of a lack of supply.
“Real estate agents continue to report strong interest with multiple offers being received.”
Wellington
Average house price across the Wellington metropolitan area increased by 4.3% in April, 10.3% for the quarter, and a significant 28.5% over the past 12 months.
The average house price is now $1,028,913.
The largest rise in prices occurred in Hutt City (13.4%), while Porirua, Upper Hutt and Wellington city all saw increases of 8.6%, 11% and 9.3% respectively.
In terms of annual price growth, Hutt City and Upper Hutt lead the way at 34.6% each.
Despite the rapid growth, real estate agents have reported slightly fewer people at open homes in recent weeks, with some investors looking to take a step back in response to the Government’s recent tax changes.
QV senior consultant David Cornford says properties are continuing to sell well despite there being fewer investors in the market and values are holding firm.
“It does, however, feel like the start of a more stable period in the market after close to 12 months of rapid value growth.
“Like much of the country, Wellington is underpinned by a supply shortage and the recent price increases are a reflection of this.
“We’re also seeing strong interest from both investors and first-home buyers for off-the-plan townhouses.”
Nelson
It’s been another busy quarter for Nelson’s residential property market with the average house price rising 6.3% to $765,247.
Multiple offers on properties remain commonplace but there are no longer exorbitant prices being paid motivated by the fear of missing out.
Canterbury
House prices continue to rise rapidly in Canterbury and Christchurch in particular, with the average price rising by 8.9% and 9.5% respectively.
The average price of a home in the region is $594,279; in Christchurch, that figure is $624,285.
Annual price rises have been highest in Christchurch’s eastern suburbs (24.7%), in the hills (22.3%), and out on the peninsula (22.1%).
Across the wider Canterbury region, house prices have also risen swiftly in the districts of Hurunui (19.2%), Ashburton (17.3%), Waimakariri (16.6%) and Selwyn (16.4%).
QV property consultant Olivia Browne says the number of days to sell has dropped plus a lower sales volume over the past month has put upward pressure on values.
“New-build activity continues to be strong and this will put even more upward pressure on house prices due to increasing land values, rising construction costs and new Government regulations.
“We may even see a shift in value trends between existing and new builds.”
Dunedin
Dunedin’s residential property market shows no signs of waning, with property prices gaining a little bit more speed in April rising 2.5% last month, up from 1.8% the month before.
The average price of a home in Dunedin is now $659,447, which is 7% higher this quarter and 17.8% more than the same time last year.
Much of that growth has occurred on the coast and peninsula, where house prices have shot up 14.3% in three months and 24.6% over a full year.
QV area manager Tim Gibson says a lack of residential listings and available land continues to be the primary driver of the market.
“As a result, lesser-quality land is becoming more attractive to prospective developers as supply issues continue to bite.”
Queenstown Lakes
The latest QV data shows a 6.1% rise in Queenstown’s average house price this quarter and an increase of 11% over the past 12 months. It now sits at $1,383,181.
Despite the lingering effects of international travel restrictions on the local economy, QV property consultant Greg Simpson says the residential property market has stabilised.
“There are two economies in the district – the tourism-based industries that are operating under extremely adverse trading conditions and the rest, which appear to be operating at near normal activity levels.”
He says the construction and real estate sectors are prospering, with high demand for property and strengthening value growth.
“The Government's latest housing policy should also help to accelerate the building of new houses, which is good news for these industries.”
Invercargill
The average house price in New Zealand’s southernmost city has increased by a whopping 9.2% this quarter – up from the 6.8% value growth last month – to $436,759. That figure is now 14.1% higher than at the same time last year.
There is continued strong demand within the “relatively affordable” $300,000-$450,000 range.
“Multiple offers are common, often resulting in prices above initial asking price,” says QV property consultant Andrew Ronald.
“There was considerably less investor activity over April, but there are still high numbers of first-home buyers competing for homes within this price range.”
Provincial centres, North Island
Wairoa tops the list of provincial centres in the North Island with prices rising by an average of 21.8% over the last three months.
It’s followed by Carterton (last month’s leader) on 17.7%, and Rangitīkei (15.8%).
Over the 12 months ending April 2021, house values in Wairoa have increased by an astonishing 46.7% the most nationally by far.
Last month’s leader, Carterton, has also experienced a large jump in average house price of 40.2%.
Provincial centres, South Island
In the South Island, Buller leads all provincial centres with house prices rising 16.6% this quarter.
Marlborough and Grey District aren't far behind with average house price rises of 13.7% and 13.1% respectively.
Buller also tops the list for annual house price growth at 35.6%.
Once again, it’s followed by Marlborough (29.9%) and Grey District (25.7%), which just edges out Gore (25.6%) by a fraction of a percentage point.
| « No sign of house prices dipping yet | House prices haven’t dropped yet – new records set » |
Special Offers
Comments from our readers
Sign In to add your comment
|
|
Printable version |
|
Email to a friend |
Now this topic has entered and my original comments are appropriate for this one today, so have copied my comments and pasted herein, because not all readers would have read it under a different topic heading.
However, just a couple of observations re this topic...
> The headline has the last word as a relevant "magic" pre-empting word.....YET
> I notice that average prices quoted from time to time are often misleading. If you take X numbers of very expensive houses and then average that total value with Y numbers of lower valued houses, the resulting "average" can be very misleading, so do a few examples on your calculator to see for yourself.
Anyway....maybe my "pasted" comments below may serve to enlighten several readers.........to my opinion?
Bubbles always burst
Comments
On Wednesday, May 05th 2021 9:54 am Michael Donovan said:
Ok ok ok The government has wasted approximately half a billion (yes with a "B") dollars, housing people into motels in the last year. Has anyone bothered to calculate how many homes (yes they could be "state" homes even)that half billion could have built All the compliance and over-regulation is 'killing' this country Builders & tradies spend literally days every month working on compliance. Oh, have you taken note of someone bigger than me finally succumbing to announcing a pending big "bubble burst" set to hit NZ house prices. Remember I put my date prediction into writing (as June/July) at the beginning of this year on this forum I prefer to do this sort of thing well in advance, as followers of my "chats" over the years will confirm. I do not tend to follow the heard Sadly, my prediction will now create havoc for thousands of kiwi house investors as the "herd" rushes like an opposing tide, and become sellers in a market that is going to be tough....especially as interest rates rise....oh gosh, that won't happen will it? Entering the "sellers" market now may appear at first to be a bit premature, however, the wise will take that option as we head into the unthinkable,,,,falling house prices......for maybe at least a decade...or more. Can you believe it. I can. Time will tell Michael Donovan
On Thursday, May 06th 2021 2:16 am Michael Donovan said:
uh oh It may be that no-one reads my views, or if they do, they are as equally a bad speller as I am??? I wrote the word "heard" instead of "herd". Oh, and just to tidy up some "housework".....what is just one reason why I chose (way back a few months ago) the timing of June-July for the house-bubble burst??? Something to do with the "conveniently re-scheduled" Davos talks from January forward to June .....because imagine how their reasoning would have been scoffed at with one of their topics....global warming (climate change). Just imagine the heckling as attendees looked out the conference windows at Davos in January.....huge snow drifts do not convince people so easily of global warming?! And they will be continuing with their "psychological methods" of trying to convince attendees of one huge fatal mistake, being that global warming is man-made, and not anything to do with natural cycles. By conditioning any of us that it is due to man-made reasons, then naturally, it makes it much easier to do the job of planet-cleaning than just telling us to clean up our planet? Which by the way, I am totally in favour of cleaaning our planet, in case you mis-read me?? And boy, is it creating new industries, for example, EV's, by banishment of cows & cars "farting". But one biggy I am actually really in favour of, plastc-bag banishing. However, it appears I may be digressing a little.....or am I? Virtually all readers must surely now be aware of the "Great Re-set." That phenomenon, along with a wee rise in interest rates is enough to absorb and accept for now. Oh....Davos is in Switzerland.