Residential property value growth slows

Media release
6 March
LVR caps take effect as residential property value growth slows

The latest monthly property value index shows that nationwide residential values for February have increased 9.3% over the past year, and 1.8% over the past three months. This means they are now 13.1% above the previous market peak of late 2007. When adjusted for inflation the nationwide annual increase drops slightly to 7.5% and values remain below the 2007 peak by -2.6%.

The Auckland market has increased 14% year on year and values are 27.3% above the previous peak. When adjusted for inflation values are up 12.1% over the past year and are 9.6% above the 2007 peak.

Andrea Rush QV National Spokesperson said, “Last month was the very first sign that the steady upward trajectory on the New Zealand, Auckland and Christchurch values over the past couple of years is starting to level off.

“This is a clear indication the LVR caps are taking effect and they appear to have led to a reduction in the rate of value growth in the residential property market.”

Auckland
Property growth in the Super City region continues to rise with values increasing year on year by 14% and 1.5% in the past three months.

North West Manukau saw the highest year on year increase with values up 17.2% and 3.7% and others South Auckland suburbs also saw the largest increases in the past three months including Papakura, up 4.5%, Franklin up 4.4% and Manukau Central up 4.1%.

Residential property values in Rodney North also climbed 3.9% in the past three months while prices in the old Auckland City remained steady with a 0.2% increase. Waitakere City is still a top performer up 17% year on year but growth has flattened off with values 0.2% lower this month than in January.

QV Valuer Bruce Wiggins said, “The big thing in Auckland at the moment is land. We’re starting to see people invest money into attaining land where high density or development potential exists ahead of the implementation of the city’s new unitary plan.”
“We’ve seen examples of this in Otahuhu, the inner North Shore and East Coast Bays. For example a property with development potential purchased in Castor Bay in February 2013 for $1.69 million reportedly resold recently for $1.99 million in the same condition. So effectively the appreciation of value is in the land,” Wiggins said.”
Hamilton and Tauranga
Values in Hamilton city are also growing with an increase of 1.7% over the past three months, and 5.4% over the past year. Values are 0.4% above the 2007 peak. The Tauranga city market has increased 0.5% in the past three months and values are up 3.4% year on year. The market there remains at 8.5% below the peak of 2007.

QV Valuer Richard Allen said, “House values are continuing to edge up incrementally in Hamilton.”

“Most of the buyer activity is in the upper end of the market in suburbs such as Flagstaff, Rototuna, Harrowfield, Huntington and Woodstock,” he said.

“Sales activity in areas popular with first home buyers has been a little more subdued due to the LVR rules starting to bite and any increase in the OCR in early March is likely to dampen things a little more.”

Wellington
The Wellington market is continuing on the same gentle upward trajectory with house prices in the region increasing 2.9% since February last year, and increase of 1.3% in the last three months.

Wellington West and East values showed small 1.4% increases over the past three months, Wellington North was up 1.6%, Wellington Central and South rose 0.9%.

Values in Upper Hutt were steady at a 0.3% rise over the past three months and Lower Hutt was up 1.2% for the same period.

QV Valuer, Kerry Buckeridge said, “We have seen a significant increase in the number of properties for sale and buyers now have a lot more choice.”

“Certain properties such as well presented, inner city character two bedroom properties are selling quickly for seriously good prices, while others are taking longer to sell,” he said.

“Developers are still reasonably confident about the central city and inner suburbs with a number of good quality apartment and townhouse developments either in the pipeline or underway as these are in high demand by inner city professionals and are commanding good rentals.”

Christchurch and Dunedin
There are further indications that the rate of growth in the Christchurch market is also slowing reflecting the national trend.

Values in the Christchurch city are up 11.1% year on year and 1.7% over the past three months. The Selwyn District has increased just 1.1% in the past three months, but is up 9.9% since February last year and 32% since the previous peak of 2007.

Banks Peninsula is up 5.4% since this time last year and has risen 2.4% in the past three months however values there are up just 3.6% since the 2007 peak reflecting the nationwide downturn in coastal property as well as the impact of the earthquakes.

QV Valuer Daryl Taggart said “Rather than the post earthquake panic where people in many cases were paying top dollar, the growth in the market is starting to slow although there are still a number of buyers and the good properties are still selling well.”

“There is continued interest from investors as a result of the good rental returns - one aspect of this is a high priced rental market in furnished homes for short term stays particularly for people having earthquake repairs done on their homes,” he said.

“Bare sections are still selling and builders are still busy putting up houses.”

Property values in Dunedin City are 1.7% above this time last year and there’s been a 1.8% increase in Dunedin South over the past three months.

QV Valuer Duncan Jack said “Dunedin value levels are remaining steady with a lower number of listings than usual.”

“Demand remains strong for well priced properties although there is a degree of buyer caution,” he said.

Provincial centres
Values in the provincial centres are variable with some remaining stable, some up and some down. In the North Island, the South Wairarapa District was up 4.9% over the past year while the Taupo District decreased by 4.9% in the same period.

In the South Island, most areas saw an increase in annual growth including Nelson which was up 3.2% and neighbouring Tasman District was up 3.8%. In Central Otago, property values increased by 7.2%, Ashburton was up 6.3% and Timaru increased 5.5%.

© Scoop Media