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House prices continue to ease

Sally Lindsay reviews the latest QV House Price Index stats region by region.

Friday, July 30th 2021, 12:25PM

House prices have risen a staggering 25.6% in the year to June, the latest QV House Price Index reveals.

However, for the second consecutive month the index has shown a slowing in quarterly house price growth from the previous month.

Values dropped 2.2% from May, with the national average house price now sitting at $943,184.

The average value increased 6.6% nationally over the past three-month period to the end of June, down from the 8.8% quarterly growth in May.

In the Auckland region, the average value now sits at $1.347 million, up 6.2% over the last quarter, with annual growth of 23.4%, up from May’s year-on-year growth of 21.8%.

QV general manager David Nagel says, “It’s too early to say the market has turned, but this will be encouraging news for government officials and regulators, concerned about the financial risks of an overheated property market.”

The easing comes after a range of new government policies were signalled to dampen activity by property investors and speculators, while there is also plenty of chatter about interest rates rising later next year.

“We’re also now into the seasonal downturn that normally accompanies the cooler months, so it’s difficult to attribute the cause to any single thing,” he says.

Of the 16 major urban centres QV monitors, all except Rotorua have shown a drop in quarterly growth compared to last month.

The strongest value gains over the past three months have come from Hastings at 8.6%, down from 11.4% last month, closely followed by Palmerston North at 8.5%, down from the 10.7% quarterly growth reported last month.

For the major centres, Tauranga continues to lead the way for the second consecutive month with 8.3% growth over the past three months, down from 10.2% quarterly growth in May.

Tauranga is joined by Christchurch on 8.3% growth, both down from around 10% quarterly growth last month.

Central New Zealand continues to show the strongest annual rate of growth, with the three fastest growing regions all in the lower North Island.

Values in the Manawatū-Whanganui region have grown 36% in the past year, while the greater Wellington and Hawke’s Bay regions have experienced annual growth of 33.3% and 31.5% respectively.

The three lowest annual growth rates are all in the South Island with Otago region experiencing a still significant 18.6% increase, Southland showing 19.1%, and Tasman at 22.9% annual growth.

“With the borders essentially closed to new residents, record rates of new houses are being constructed, particularly in the main centres.

“But while interest rates are still at record lows, accompanied by a dearth of property listings in most parts of the country, it’s unlikely that house values will fall any time soon.

“We’ll likely see a continued slowing in the rate of price increases over the coming months as the property market absorbs the recent changes and winter really sets in,” Nagel says.

Auckland

House prices have risen by an average 0.8% across the Auckland region in June − its lowest rate of monthly growth since July 2020 and well down from the 3% and 2.3% growth in April and May respectively.

Even the Auckland region’s rolling rate of quarterly growth has dropped from 8.4% to 6.2% this month.

But the average house price in the region ($1.347 million) is still well up on the same time last year (23.4%), with Papakura (27.2%), Rodney (25.2%), and Waitākere (24.8%) leading the way.

The smallest amount of house price growth over the past 12 months was on the North Shore at 21.6%.

Average house prices are highest in Auckland’s central suburbs ($1.564 million) and on the North Shore ($1.520 million), followed by Rodney ($1.249 million), Manukau ($1.187 million), Waitākere ($1.085 million), Papakura ($943,001) and Franklin ($870,597).

QV senior consultant Rupert Yortt says a drop in supply levels and low interest rates will likely continue to keep Auckland house values up for the foreseeable future. This is despite the region’s reduced rate of house price growth over the past month.

“Recent news about the council endorsing the Government’s National Policy Statement on Urban Development will also drive up land values in the areas in which this will have an effect.”

The proposal is to increase intensification by allowing six level developments in metropolitan centres – within certain walking catchments and on key transport routes.

“This will also mean changing rules around the minimum number of off-street car parks and some desire for increased development in the special character areas where there is limited actual ‘character’.

“This may have an impact on many of the established central suburbs typically dominated by the appearance of villas, cottages and other early 20th century dwellings.”

Northland

Quarterly house price growth appears to be tapering off slightly in Whangārei, where the average value of a home has increased by 7% to $739,973 − down from the 10.6% quarterly value growth in May and the 10.4% growth in April.

Even further north, house prices in the Far North District have increased by an average 9.1% in three months to $646,390. In Kaipara, the average house price has increased by 9% this quarter to $782,661.

Tauranga

While other major centres in New Zealand are beginning to show more obvious signs of cooling, Tauranga’s residential property market remains stubbornly hot.

House prices in Tauranga continue to grow at a rapid rate, rising 8.3% for the quarter to a new average of $1.042 million.

That three-month rolling average is slightly down on the 10.2% in May but higher than the 7.8% in April and considerably higher than this month’s national average of 6.6%.

QV property consultant Derek Turnwald says agents report a decline in investor interest but not an increase in investors selling properties.

“We should have a clearer idea of their intentions by late winter or early spring, once they have had more time to gauge the market and the effect of LVR changes, the bright-line test extension and tax deductibility law changes.”

Meanwhile, he says agents are seeing a drop-off in interest from first home buyers, “perhaps as a result of reports from the Reserve Bank and others that interest rates are likely to start rising in the mid to long-term”.

Waikato

The average price of a home in Hamilton is now $820,337 − precisely 25% higher than at the same time last year.

But the good news for first-home buyers and policy makers is that Hamilton’s rate of monthly house price growth has dropped for the second month in a row, easing from 3.2% in April to 2.3% in May, and then 1.2% in June.

The rate of house price growth appears to be easing across much of the Waikato region, with QV’s rolling three-month average of house price growth dropping slightly from 9.4% in April to 9% in May, and then 7.8% in June.

The most notable exception was Waikato District, which has experienced rapid house price growth of 12.5% this quarter.

Local QV property consultant Jarrod Hedley says, “New residential developments in nearby rural service towns such as Ngāruawāhia, Te Awamutu, Cambridge, Matamata and Morrinsville, continue to drive demand and value level in these areas with developers also looking at larger quarter acre sections with the ability to subdivide in these towns.”

Rotorua

The June quarter was another busy one for Rotorua’s residential property market, with the average house price rising 7.6% (up from the 6.4% in May) to $691,789.

That figure is now 21.4% higher than it was at the same time last year.

QV property consultant Derek Turnwald says local agents have been reporting fewer people attending auctions and more vendors opting for negotiated prices or tenders.

“Investor interest has definitely declined sharply in reaction to LVR changes, [the] bright-line test extension and tax deductibility law changes.

“However, there hasn’t been a noticeable increase in investors selling properties yet,” he says.

“First-home buyer interest has also dropped off a little, perhaps in response to the Reserve Bank’s announcement that in 2022 the OCR is likely to increase in response to inflationary pressure.

“Despite all this, properties are still selling strongly, usually in multi-offer situations,” he says.

Taranaki

House prices continue to push skyward at a rapid rate in New Plymouth, despite a slight drop in QV’s three-month rolling average − from 8% in May to 6.9% in June.

In the 12 months to June 30, the average house price has increased by 26.7% to $658,166.

Meanwhile, house prices in the neighbouring districts of Stratford and South Taranaki have increased by 27.7% and 27.5% respectively over the past 12 months.

Hawke’s Bay

Quarterly house price growth has dropped in Napier from 9% to 5.6%, and it’s a similar story in neighbouring Hastings, where the rate of quarterly value growth has dropped from 11.4% to 8.6%.

But the average house price in Napier ($814,055) is still 28.6% higher than it was at the same time last year.

Hasting’s average house price ($818,322) has increased by even more, rising 34.7% in the 12 months to June 30, 2021.

Local QV valuer Damian Hall says the rate of growth in house prices slowed across the Hawke’s Bay region in June, following a similar trend throughout the month of May.

“The market is still fairly active especially at the entry level and despite the decline in activity across the board, we’re still seeing some strong sales,” he says.

“The winter months tend to be quieter and this is one of the main factors for the rate of growth slowing.

“However, with the effect of LVR restrictions and investor regulations, some buyers appear to be adopting a wait-and-see approach for now.”

Palmerston North

The latest QV House Price Index shows a slight drop in the rate of quarterly house price growth in Palmerston North − down from 10.7% in May to 8.5% in June.

The average house price is now $717,733, up 35.6% over the last 12 months.

Local QV property consultant Olivia Roberts says the market is still strong and there are continuing increases in property prices across the Manawatū region.

“There are still extremely low numbers of properties on the market, with it becoming more competitive now after many buyers adopted a brief ‘wait and see what happens’ approach immediately following the Government's recent changes.

“The lower end of the market is still stable and real estate agents continue to report strong interest with multiple offers being received, particularly for properties with subdivision potential,” she says.

Wellington

The Wellington region’s rate of house price growth has crept back up slightly this month from 1.4% in May to 1.8% in June, with the average house price sitting at $1.015 million − 33.3% higher than at the same time last year.

“Although values continued to increase, there are signs value growth is slowing,” says QV senior consultant David Cornford.

“Investors are now focussing on off-the-plan purchases, and townhouse developments in the region are continuing to sell well.

“Investors are now less focused on existing stock, providing first-home buyers with a good opportunity in this segment of the market.

“There have been reports of open homes being slightly less well attended compared to the start of the year, but this isn’t unusual over the winter months,” he says.

“While there continues to be a significant shortage of stock in the region and more buyers than sellers, there will continue to be upward pressure on property values.”

Nelson

House price growth has been slowly easing in Nelson since March this year, with monthly price gains dropping from 2% in April to 1.7% in May and 1.4% in June.

The average house price here is $789,621, which is 19.2% higher than at the same time last year.

QV senior property consultant Craig Russell says house prices are holding firm with strong demand and a lack of supply continuing to drive the market − despite a drop-off in the number of active investors looking for houses.

“Investors are less active in the market with anecdotally the majority of open home attendees being either owner-occupiers or first home buyers,” he says.

“We are seeing a number of qualified purchasers who are active in the market making relatively clean and strong offers for the right property.

“It is still relatively common for properties to have low days to sell or to be under offer before the first open home.”

Canterbury

Residential value growth has slowed for the second month in a row within greater Christchurch − down from 3.7% in April to 2.5% in May, and now 1.9% in June.

Annually, however, house prices have increased by 25.8% to an average $651,914.

Across the wider Canterbury region, house price growth has slowed by an average 1.1% this quarter.

Selwyn District has bucked the trend so far and held steady, experiencing the most growth this quarter (8.9%), followed by Christchurch City (8.3%) and Waimakariri (7.9%).

Local QV property consultant Olivia Brownie noted the number of residential sales in Canterbury were down on last month’s figure.

“That is to be expected over the winter months,” she says.

“We consider there will be more of the same within the greater Christchurch market, with new and reintroduced Government regulations beginning to influence the market.

“However these factors are still continuing to be offset by a lack of supply and low interest rates, therefore maintaining some value growth,” she says.

Dunedin

House price growth appears to have stabilised in Dunedin, with the average value ($671,364) increasing by less than 1% for the second month in a row.

Prices have increased by 4.3% this quarter and 20.4% annually.

QV area manager Tim Gibson says things are still moving but there is a lot more uncertainty and cautious house viewers out there than there has been in the recent past.

“We’re hearing of fewer attendees at open homes, especially in the upper price brackets, and it appears the banks have tightened-up their lending restrictions, which is also having an effect.”

Queenstown Lakes

Monthly house price growth has been tapering off in Queenstown since March, when it was 4.1%.

It hasn’t surpassed 1% since then, with the latest QV House Price Index recording almost no value growth at all (0.1%) in June.

Annually, it’s a different story, with the average value up 15.6% to $1.386 million.

“The removal of loan to value ratio restrictions for 12 months had the intended effect and revitalised investment purchasing with never-seen-before low cost borrowing that has enabled and motivated purchasers,” says local QV property consultant Greg Simpson.

“The market is now in equilibrium and constantly adjusting to Government intervention.

“It is increasingly likely the Reserve Bank will also introduce debt to income (DTI) limits to reduce the likelihood of mortgage defaults and to support financial stability and house price sustainability.”

Invercargill

Invercargill's residential property market has shown little-to-no price growth for the second month in a row, registering just 0.8% in the index for June.

However, the city’s average house price ($444,011) remains 16.7% higher than at the same time last year.

Local QV property consultant Andrew Ronald says price levels appeared to be stabilising in Invercargill.

“Though we’re still seeing continued strong demand for most property types, buyer inquiries and open home numbers are well down compared to early 2021 and fewer properties are attracting multiple offers.

“Favourable borrowing rates are still encouraging buyers to the market, stimulating market activity,” he says.

Provincial centres, North Island

Waitomo tops the list of provincial centres in the North Island this month with its average house price increasing by 16.1% this quarter to $367,990.

This is significantly lower than the 23.3% registered by last month’s leading provincial centre, Tararua, which came second this month on 14.4%.

Over the past 12 months house values in Wairoa have increased by a remarkable 40.8%. It’s followed closely by Whanganui (40.4%) and Masterton (38.8%).

Provincial centres, South Island

In the South Island, Grey District leads all provincial centres for quarterly house price growth (12.6%), followed by Buller (11.1%) and Clutha (10.1%).

Buller tops the list once more for annual house price growth at 40.5%, standing head-and-shoulders above its nearest two rivals, Grey District (32.9%) and Marlborough (30.1%).

Tags: house prices housing market property values QV

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Lender Flt 1yr 2yr 3yr
AIA 4.55 2.85 3.25 3.55
ANZ 4.44 ▲3.39 ▲3.85 ▲4.09
ANZ Blueprint to Build 1.68 - - -
ANZ Special - ▲2.79 ▲3.25 ▲3.49
ASB Back My Build 1.79 - - -
ASB Bank 4.45 2.85 3.25 3.55
Basecorp Finance 5.49 - - -
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - 2.85 3.25 3.55
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 4.55 3.45 3.85 4.15
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online 2.25 1.85 2.35 2.65
Heretaunga Building Society 4.99 3.80 3.90 -
Lender Flt 1yr 2yr 3yr
HSBC Premier 4.49 2.19 2.45 2.69
HSBC Premier LVR > 80% - - - -
HSBC Special - 2.25 - -
ICBC 3.69 ▲2.45 ▲2.85 ▲3.15
Kainga Ora 4.43 2.88 3.28 3.59
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.75 ▲3.80 ▲4.00 4.34
Kiwibank - Offset 3.75 - - -
Kiwibank Special 3.75 ▲2.95 ▲3.15 3.49
Liberty 5.69 - - -
Nelson Building Society 4.95 2.99 3.24 -
Lender Flt 1yr 2yr 3yr
Pepper Essential 4.79 - - -
Resimac 3.39 2.98 2.79 3.29
SBS Bank 4.54 2.99 3.39 3.59
SBS Bank Special - 2.49 2.89 3.09
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - ▲2.65 - -
The Co-operative Bank - Owner Occ 4.40 ▲2.85 ▲3.25 ▲3.49
The Co-operative Bank - Standard 4.40 ▲3.35 ▲3.75 ▲3.99
TSB Bank 5.34 3.35 3.75 4.05
TSB Special 4.54 2.55 2.95 3.25
Wairarapa Building Society 4.99 3.55 3.49 -
Lender Flt 1yr 2yr 3yr
Westpac 4.59 3.45 3.85 4.09
Westpac - Offset 4.59 - - -
Westpac Special - 2.85 3.25 3.49
Median 4.54 2.95 3.25 3.49

Last updated: 29 September 2021 8:51am

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