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14 Dec 2017

Market Picks up after Election

The New Zealand property market has enjoyed its usual Spring bump, despite uncertainty surrounding the new Government and its housing policies. According to data from the Quotable Value (QV) House Price Index, residential property values increased 6.4 percent nationwide during the month of November - compared with just 3.9 percent in October. Growth was even more pronounced on a quarterly basis, with values rising by 3.6 percent to November compared with 0.9 percent to October. While values in Auckland remained flat and construction growth is still a concern, the property market continues to exceed expectations in an uncertain post-election period.

Despite a lack of growth in Auckland, former Auckland City Council suburbs saw values rise by 1.6 percent year on year and 0.7 percent on a quarterly basis. Auckland City East rose well above average for the region, up 3.3 percent annually and 1.8 percent over the past three months. Values dropped 1 percent for North Shore City over the year ending November but increased by 1 percent over the quarter. Values were down 1.6 percent in Manukau over the year and 0.9 percent over the quarter. Annual growth was up in other areas, including Franklin, Papakura, and Rodney - despite the latter dropping by 1.1 percent over the past three months.

According to QV Auckland senior consultant James Steele, "There's been no significant change to the market dynamic since the change of government... Values are holding in well-located areas while they have dropped back in some areas further out of the city centre." While an oversupply of housing in Manukau and other areas caused a decrease in prices, according to Steele, this was mostly "in large new subdivisions which are above the median house price... But other tightly held areas, particularly in central Auckland, were still doing well and seeing values still rising... A lack of pressure on property owners to sell, particularly given low interest rates and solid rental levels, has meant that the large decrease in demand over the past year instigated by LVR restrictions has meant prices have remained relatively flat."

Other New Zealand cities were also affected by the Spring upturn, which is more subdued than previous years and also took longer to arrive due to the national election. Values across the Wellington Region increased by 9.8 percent for the year ending November and 2.6 percent over the quarter. Wellington City increased by 9.7 percent for the year and 3.4 percent over the past three months. Slight growth of 0.2 percent for the quarter was also recorded in Christchurch, despite a drop of 1.5 percent for the year. Dunedin residential property values increased by 13.0 percent in the year to November, having grown by 2.7 percent over the past three months.

According to QV National Spokesperson Andrea Rush, "Auckland and Christchurch values also ticked up slightly over the past three months bucking a downward trend seen over the past couple of months. However, values in Hamilton and Tauranga ticked down slightly and some areas to the south and north of Auckland that have seen very strong growth in recent years also saw values drop significantly including the Kaipara and Hauraki Districts both down around 4.0% over the past quarter. The easing in LVR restrictions in January and retail banks lending criteria is likely to help improve activity and demand in housing the market as we move through the summer months but it’s possible the usual slow-down over the Christmas period may mean we don’t see the full impact of this until February."

Image source: Linor R/Shutterstock