The real estate market in New Zealand continues to evolve, with Wellington house prices increasing dramatically over the last year as the Auckland market continues to cool. While the biggest city in New Zealand is still the most expensive, house price gains continue to slow in previous hot spots across the city and regional areas like Tauranga. The market is not in decline everywhere, however, with locations such as Rotorua, Christchurch, and Wellington leading the charge in terms of price growth.
According to the latest figures from Quotable Value, nationwide property price growth eased to 11.1 percent in the year ending April, down from 12.9 percent in the year ending March. Rotorua topped the list for price growth, with values soaring nearly 28 percent over the last 12 months. Queenstown prices grew 23.7 percent over the year, with Wellington property values also jumping by a massive 21.2 percent. Low supply levels in the capital and unsustainable prices in Auckland are both having an impact on the Wellington market as it continues its rapid rise.
According to Wellington real estate agent Nicki Cruickshank, "There never seems to be enough stock in Wellington," with so few listings in the capital that houses are snapped up almost as soon as they go on sale. "If you want to be in the city you have to pay a little bit more or you have to move out. Obviously the Kapiti Coast and the Hutt [Valley] have gone up because of that push out effect." said Cruickshank, adding "There's never enough good houses in the city, particularly family houses."
In comparison, the Auckland market experienced its slowest price growth since 2014, despite the fact that three quarters of Auckland's areas are worth more than $900,000. Declining property value growth is partly due to tighter lending restrictions, with investors increasingly forced out of a market that is already difficult for first-home buyers. According to QV national spokesperson Andrea Rush, "Some of those entry level investors have been hard hit by the 40 percent deposit requirement and that's taken them out of the market." While first-home buyers will benefit from slower growth, long term solutions will depend on increasing supply and new legislation.
According to Harcourts chief executive Chris Kennedy, "The first home buyer is required to front with 20 percent [in Auckland], and when you're looking at an average sale price of a million dollars or thereabouts, then that becomes somewhat difficult for the first home buyer ... It becomes somewhat difficult for an investor to front with $400,000." While cooling conditions have been welcomed by those trying to get a foothold on the property ladder, ongoing lack of supply in the city amidst a rising population will ensure healthy growth for some time to come.
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