Sales hot spots: Where property values are still rising
The number of homes selling in Auckland has tumbled from a peak of more than 2000 in June 2017 to below 700 now, according to the latest OneRoof.co.nz house market figures.
The fall in sales volumes is most acute in the city's higher price brackets, with residential sales over $1 million representing just 23.4 per cent of total sales in the city in March and April, despite $1 million-plus properties representing nearly one third of Auckland’s housing stock.
OneRoof and Valocity figures show Auckland's median value slipped from $883,000 to $871,000 in the last 12 months while the median for New Zealand rose from $554,000 to $582,000.
Of the main urban centres, Dunedin was the strongest performer, with median property values there rising 11.5 per cent year on year to $416,000. Queenstown and Wellington also showed continued growth, with median values in both cities up by around 8 per cent, to $1,005,500 and $763,000 respectively, although demand has eased in the last quarter.
Median values in Hamilton and Tauranga grew around 4 per cent in the 12 months to April, to $551,000 and $660,000, while Christchurch's median value - $443,000 - didn't budge at all year on year.
Of the smaller urban centres, Whanganui saw the most growth, up 19.7 per cent year on year to $261,000. Also recording double digit surges in the 12 months to April 2019 were:
• Invercargill, up 15 per cent to $268,000
• Rotorua, up 14.3 per cent to $439,000
• Palmerston North, up 12 per cent to $401,000
• Whangarei, up 11.5 per cent to $533,000
OneRoof.co.nz editor Owen Vaughan says: "Smaller towns such as Whanganui and Invercargill are still in catch-up mode. The fact they are starting from a lower base means the values gains look proportionately higher but they are still very affordable markets."
Valocity director of valuation innovation James Wilson the recent drop in sales volumes in Auckland and elsewhere should be treated with caution.
“During the boom years, many more sales were by auction, which settled straight away. Now with more sales as price by negotiation or tenders, settlement for sales in March may not show up in figures until April or even May.
“That said, the full month of January this year nationwide just over 4000 properties sold, which is well down on the 7100 of January 2018. In Auckland, looking back to January sales this year they were just over 1700, compared to just over 2000 same time last year.”
In Auckland, the most sales were in the $750,000 to $1 million price bracket (44 per cent of sales) and $600,000 to $750,000 bracket (19 per cent of sales). Although these price brackets make up 55.6 per cent of the city’s housing stock, they accounted for 63 per cent of sales in March.
Vaughan says: "First-home buyers’ share of the market has hit a high, growing from a low 23 per cent in March 2017 to now just over 27 per cent.
"Conversely, investors' market share in Auckland has dropped to a low of 14 per cent, reflecting caution within that buyer group over Government legislation."
Wilson adds: “While first-home buyers make up 28 per cent of buyers nationwide, there’s been a bit of a drop off around the country. Investors had taken a step back, but it's likely we'll be back to seeing increased competition from them in coming months."
Nationwide, the upper end of the market ($800,000) still accounts for one third (32.8 per cent) of sales, but that’s well below that segment’s share of housing stock. In Auckland, $1.5 million-plus sales accounted for just fewer than 8 per cent of market activity.
“Movers and buyers at the higher end of the market tend to be more informed, so if they don’t need to sell they tend to withdraw from the market,” says Wilson.
“We don’t know when, but affordability will come more into play as the available stock at those lower price points drops away.”
In pockets around the country, other dynamics come into play. Tauranga, which has benefited for several years from movers from Auckland taking advantage of lower prices, has seen volume drops on par with the bigger city. The strongest growth has been in mid-market suburbs, with Tauranga Central and Tauranga South leading the pack.
A disproportionate share of sales are in the $500,000-$750,000 price bands, but the share of new mortgage registrations to first-home buyers and investors have both dropped away.
Vaughan says: "The Tauranga boom has moved west to Rotorua, where some buyers are heading to find more affordable houses. That's also having an effect on the upper end of the market, with the top sale price in the city in the past year hitting $2.2 million."
In Hawke's Bay, sales volumes in February and March were well below 2018 and 2017 levels.
Fifty-six per cent were in the $300,000 to $400,000 price band. Outside of Napier and Hastings, there were no sales over $750,000, although, in the past year, Napier did achieve a top sale of $2.8 million. "The bargain prices seen in parts of Hawke's Bay have been good for first home buyers, who accounted for 33 per cent of new mortgage registrations in March, one of the highest shares in the country. And investors, too, are big players in the region, accounting for one in five sales, well above the national average of 16 per cent.
Whanganui/Manawatu continues to be one of the provincial growth stories: affordability is at the heart of that surge, with 53 per cent of sales below $300,000. Vaughan says: "The region’s mini-boom means sale prices are now 40.7 per cent over CV and building consents are at their highest for two years. The wins are going to investors - now over 20 per cent of the market, as first home-buyers have slipped back to below 27 per cent - two years ago, they are around 33 per cent."
Vaughan adds: "Whangarei is still growing, and has some movement in the million-dollar plus bracket, with the top sale in the city in the last 12 months coming in at $2.1 million."
He adds: “In the wider Northland region, first-home buyers’ share is starting to slip, now below the national average after reaching 30 per cent at the end of last year."