Jonno Ingerson, Head of Research, CoreLogic NZ Ltd.
The latest monthly QV house price index shows that the rate of increase of New Zealand property values is near zero.
It is yet another source confirming a widespread slowdown in the housing market – from demand, to sales volumes and of course values.
First I’ll cover values, then take a look at some of the causes, and end with my perspective on where this is all likely to go.
Value increases slow
As always, there are wide variations between cities and regions, but the general pattern is of a marked slowdown in the main cities, especially in the north, accompanied by a distinct slowing in regional areas.
To be clear – we aren’t talking about a widespread drop in values. In fact in many areas they are still increasing. It’s just that the rate of that increase is a lot slower than it has been over the past two years.
Auckland always tends to get plenty of attention when it comes to house prices, so let’s start there. According to the QV index, values in Auckland have been very gradually sliding since November, and have now dropped 0.7% since then. Digging a little deeper, we can see that values have been dead flat since November in the central city, Manukau and Papakura. The North Shore and Waitakere are both down over 2% since that time. Meanwhile, the old Rodney area in the North has risen 4.5% over the same time, still being pushed up by Aucklanders looking for more affordable housing on the northern fringe. Contrast all this to most of Auckland increasing at about 8% in the six months leading up to November. Quite a change!
From about mid-2015 onwards, values began to rise rapidly in most of the other main centres, with the exception of Christchurch. That rate of increase has eased off to varying degrees.
In Hamilton, values were increasing as fast as 31.5% in the year to July 2016. Value change in the last six months has been exactly zero. Tauranga was rising 28.5% in mid-2016 and in the last six months only 2.7%. Getting the picture?
Further south, in Wellington the value increases didn’t get to the same crazy rates as further north, but having peaked at 21.5% annual change in 2016, that rate has now slowed to 7.4% over the past six months (an equivalent annual rate of 15%).
In the South Island, Christchurch and Dunedin are marching to their own beat. Christchurch values have been increasing only very slowly for the past three years, at a rate of between 2% and 4% annually. They are now dropping very slowly at a rate of 1.2% over the past six months. Dunedin has only just begun to slow in the last month. Another standout area worthy of mention is Queenstown. A stellar performer last year, increasing at 32% in the year to November, the last three months have seen a miserable 1.2% increase. Quite some slowdown that.
Source: www.QV.co.nz
Image Source: www.QV.co.nz