10 minute read
Market update
Northland 25%
Advertisement
Auckland 24%
WHITE-HOT HOUSING MARKET HAS NZ AT
FEVER PITCH Taranaki 25% Taranaki 25% Waikato
25%
Bay of Plenty 26%
Hawke’s Bay 34%
Gisborne 39%
From gloom to boom to gloom again – the housing market’s performance in the 12 months since the Covid-19 lockdown lifted has brought joy to some and frustration to others. OneRoof editor OWEN VAUGHAN reports on unprecedented price rises.
It's now been a full 12 months since New Zealand's property market opened for business again after more than two months of Covid-19 restrictions brought the real estate industry to a standstill.
Back in May 2020, the future of the housing market was far from certain. Sales were happening and the crowds were back at the open homes, but the overall sentiment was that any surge in the market would be short-lived.
But a potent combination of record low interest rates and the removal of home loan restrictions, as well as travel restrictions curbing Kiwi spending, saw a rush of buyers enter the market and house prices grow at their fastest pace in years. This in turn led to a series of government and Reserve Bank measures aimed at slowing house price growth.
According to OneRoof’s latest snapshot of the housing market, New Zealand’s median property value — or typical house price — has jumped 25% in the last 12 months to $779,000, in effect adding $154,000 to the cost of buying a home.
The figures, from OneRoof and its data partner Valocity, show Manawatu¯ -Whanganui is the country’s hottest property market, with the region’s median value rising 41% — or $158,000 — to $548,000.
Also feeling the heat are Gisborne (up 39% to $549,000), Marlborough (up 35% to $622,000), Hawke's Bay (up 34% to $681,000) and Greater Wellington (up 33% to $888,000).
Auckland house prices — the focus of national concerns around housing affordability — saw the biggest dollar leap since the end of the first Covid-19 lockdown. The city's median value jumped $219,000 in the last 12 months to a new high of $1.114 million. For first-home buyers, the increase represents an extra $43,000 in deposit over the 12-month period.
The post-Covid boom has radically altered the shape of the housing market. New Zealand now has 20 suburbs where the median property value is $2m or above. That's up from four a year ago and 11 three months ago. And another 13 suburbs are likely to join them soon.
Whitford, in Auckland eastern fringes, has joined Herne Bay in the $3m club, with St Marys Bay and Coatesville, all in Auckland, and Oriental Bay in Wellington on their way to crossing the threshold.
A year ago, no suburb had a median value of $3m or more and Herne Bay, long the country’s most expensive place to buy a home, was half a million dollars away from becoming the first. Its median value is now $3.31m — up almost $800,000 this time last year.
The figures show that of the 871 New Zealand suburbs with 20 sales or more in the last year, 284 — or 32% — have median property values of $1m or above, up from 197 last quarter and 118 a year ago.
For many homeowners, this is a significant boost to their real estate fortunes. For those not on the property ladder, the goal of owning a house, even in a low interest rate environment, may seem further off than ever.
In Auckland, just 16% of the city's suburbs have median property values of less than $1m. That's down from 25% last quarter and 52% a year ago. In the year since lockdown ended, house prices in many Auckland suburbs have accelerated more than 40%.
The change can be seen in the other major metros:
Southland 25%
ManawatuWhanganui 41%
West Coast 17%
Tasman 20%
Canterbury 19%
Nelson 20%
Marlborough 35%
Wellington 33%
What the 40%+ map tells you 35%+
The different colours on the map show 30%+ the extent of the 25%+ house price changes for each 20%+ New Zealand region. 15%+
10%+
Otago 14%
What the map tells you 40%+ 35%+ 30%+ 25%+ 20%+ 15%+ 10%+
Latest median value value 12-month 12-month $ change $ change 12-month 12-month % change % change Highest sale Highest sale last 12 mths last 12 mths
Extra deposit Extra deposit required sincerequired since May 2020 May 2020 New Zealand $779,000 $154,000 25% $24,000,000 $779,000 $154,000 25% $24,000,000 $30,800 $30,800 Auckland Auckland $1,114,000 $219,000 24% $24,000,000 $1,114,000 $219,000 24% $24,000,000 $43,800 $43,800 Bay of Plenty Bay of Plenty $792,000 $162,000 26% $5,875,000 $792,000 $162,000 26% $5,875,000 $34,400 $34,400 Canterbury Canterbury $543,000 $88,000 19% $9,000,000 $543,000 $88,000 19% $9,000,000 $17,600 $17,600 Gisborne Gisborne $549,000 $154,000 39% $2,150,000 $549,000 $154,000 39% $2,150,000 $30,800 $30,800 Hawke’s Bay Hawke’s Bay $681,000 $171,000 34% $4,450,000 $681,000 $171,000 34% $4,450,000 $34,200 $34,200 Manawatu-Whanganui $548,000 $158,000 41% $2,250,000 Manawatu-Whanganui $548,000 $158,000 41% $2,250,000 $31,600 $31,600 Marlborough Marlborough $622,000 $162,000 35% $3,000,000 $622,000 $162,000 35% $3,000,000 $32,400 $32,400 Nelson Nelson $692,000 $117,000 20% $3,000,000 $692,000 $117,000 20% $3,000,000 $23,400 $23,400 Northland Northland $667,000 $132,000 25% $5,650,000 $667,000 $132,000 25% $5,650,000 $26,400 $26,400 Otago Otago $623,000 $78,000 14% $10,500,000 $623,000 $78,000 14% $10,500,000 $15,600 $15,600 Southland Southland $399,000 $79,000 25% $1,550,000 $399,000 $79,000 25% $1,550,000 $15,800 $15,800 Ta Taranaki ranaki $523,000 $103,000 25% $2,560,000 $523,000 $103,000 25% $2,560,000 $20,600 $20,600 Ta Tasman sman $757,000 $127,000 20% $4,720,000 $757,000 $127,000 20% $4,720,000 $25,400 $25,400 WaikatoWaikato $726,000 $146,000 25% $5,000,000 $726,000 $146,000 25% $5,000,000 $29,200 $29,200 We Wellington llington $888,000 $218,000 33% $4,310,000 $888,000 $218,000 33% $4,310,000 $43,600 $43,600 We West Coast st Coast $269,000 $39,000 17% $1,200,000 $269,000 $39,000 17% $1,200,000 $7,800 $7,800
• Wellington has just seven suburbs where the median property value is less than $1m, and just two — Te Aro and Wellington Central — where the median value is less than $900,000. • Tauranga’s $1m club has grown from just one suburb a year ago to six, with another three suburbs close to joining and no suburb boasting a median value of less than $600,000. • Hamilton now has four $1m-plus suburbs — up from zero a year ago — and the number of suburbs with a median value of $600,000 or less has shrunk from 20 to zero. • In Dunedin, the number of suburbs with median values of $600,000 or less has dropped from 29 to 11, while in Christchurch — still one of the country’s most affordable places to buy a home — that number has dropped from 55 to 37. • And while the ban on international visitors hit the economy and housing market hard, in Queenstown Lakes, in the months immediately after the lockdown, the city is still an expensive place to buy property, with just three of its suburbs showcasing median values of less than $1m.
Covid and low interest rates have changed the pecking order at a territorial authority level as well. The most expensive place to buy a house in New Zealand is no longer Queenstown Lakes but Auckland’s North Shore, where the median property value is $1.308m — up 24%, or $253,000, on the same period last year.
Next is Auckland City (up 24%, or $239,000, to $1.234m), followed by Auckland’s Rodney region (up 24%, or $224,000, to $1.154m); Queenstown Lakes (up just 9%, or $88,000, to $1.108m); Auckland’s Manukau (up 27%, or $220,000, to $1.05m); and Wellington City (up 27%, or $215,000, to $1.025m).
All but 15 territorial authorities (TA) have seen house price growth of 20% or more in the last 12 months, with Kawerau, in the Bay of Plenty, showing the least — up just 6%
to $323,000, although it has to be said that prices have more than doubled in the TA in the last five years, a big change in fortunes for the market there. And 10 TAs saw growth of 40% or more, with house prices in South Wairarapa, in Greater Wellington, jumping a stunning 52% — more than $280,000 — in the last 12 months to $821,000.
These post-lockdown increases are now baked in, and it would take a GFC-type event to bring prices back down to pre-Covid levels.
In the three months since the last OneRoof Property Report, a raft of new measures designed to slow the market have been implemented. The Reserve Bank reintroduced the loan to value ratio restrictions and the Government announced new policies aimed at dampening speculative demand and tilting the balance towards first-home buyers. These changes included: • Investors losing the ability to write off interest expenses; • The bright-line test extending from five to 10 years; • The lifting of price and income caps on First Home Grants; and • A $3.8 billion Housing Acceleration Fund to finance infrastructure.
So far, the impact of these changes on price growth is yet to be felt, it may be some months before the most farreaching of the Government’s policies, the tax changes around investor assets, affects buyer behaviour in the buy-to-let market.
In its economic forecast, released in the Budget, the Treasury stated that annual house price growth would slow from a peak of 17.3% this year to just 0.9% by mid next year, with Finance Minister Grant Robertson declaring: “This is a very sharp adjustment in house prices but a very necessary one.”
Nationally, the share of new mortgage registrations to investors this quarter is up slightly on the same period a year ago, from 23% to 24%, but still down massively on their share during last market peak, in 2016, when it was 29%.
First-home buyers — the group most in competition with investors for affordable homes — have seen their share of the market dip from 42% a year ago to 39% this quarter (although their share remains higher than the 32% in 2016).
The percentage of refinancers has risen from 23% to 27% over the last 12 months while the share of the market represented by movers has dipped from 12% to 11% over the same period.
The chart below ranks New Zealand's territorial authorities by median property value, with Auckland's North Shore the most expensive place to buy a home and Buller, within the West Coast region, the cheapest. The chart also shows the extra thousands of dollars first home buyers in each TA would have to save as a result of rising house prices. The sums range from as low as $3500 for Kawerau to $56,300 for South Wairarapa. OneRoof calculated the extra money required for a 20% deposit by using the current median property value in each region and comparing it to the median value 12 months ago.
Latest median value
Extra deposit required since May 2020
Auckland - North Shore $1,308,000 $50,600 Auckland City $1,234,000 $47,800 Auckland - Rodney $1,154,000 $44,800 Queenstown-Lakes $1,108,000 $17,600 Auckland - Manukau $1,050,000 $44,000 Wellington $1,025,000 $43,000 Auckland - Waitakere $993,000 $39,600 Western Bay of Plenty $921,000 $34,200 Porirua $886,000 $50,200 Thames-Coromandel $884,000 $37,800 Auckland - Franklin $882,000 $35,400 Tauranga $880,000 $39,000 Auckland - Papakura $880,000 $37,000 Kapiti Coast $846,000 $46,200 Waikato $836,000 $25,200 South Wairarapa $821,500 $56,300 Lower Hutt $805,000 $41,000 Waipa $800,000 $30,000 Upper Hutt $799,000 $39,800 Tasman $757,000 $25,400 Hamilton $729,000 $29,800 Napier $722,000 $35,400 Whangarei $719,000 $33,800 Hastings $693,000 $37,600 Nelson $692,000 $23,400 Selwyn $673,000 $14,600 Kaipara $672,000 $14,400 Taupo $669,000 $29,800 Palmerston North $664,000 $40,800 Carterton $648,000 $37,600 Central Otago $630,000 $10,000 Marlborough $622,000 $32,400 Whakatane $615,000 $23,000 Matamata-Piako $609,000 $18,800 Waimakariri $602,000 $20,400 Manawatu $601,000 $33,200 Dunedin $597,000 $23,400 Rotorua $588,000 $21,600 New Plymouth $586,000 $24,200 Mackenzie $584,000 $14,800 Masterton $581,500 $34,300 Far North $568,000 $21,600 Kaikoura $564,500 $19,900 Hauraki $561,000 $21,200 Gisborne $549,000 $30,800 Otorohanga $544,000 $28,800 Christchurch $541,000 $18,200 Horowhenua $529,000 $31,800 Central Hawke's Bay $514,000 $25,800 Hurunui $491,000 $11,200 Opotiki $451,000 $23,200 Whanganui $448,000 $27,600 Timaru $434,500 $12,900 Southland $429,000 $6,800 Ashburton $428,000 $13,600 Waitaki $421,000 $15,200 Rangitikei $414,500 $25,900 Stratford $412,000 $18,400 Invercargill $402,000 $16,400 Tararua $393,000 $23,600 South Waikato $375,000 $16,000 Clutha $357,000 $18,400 South Taranaki $344,000 $15,800 Waimate $341,000 $10,200 Ruapehu $333,000 $17,600 Gore $331,000 $15,200 Kawerau $323,000 $3,600 Westland $315,000 $8,000 Waitomo $310,000 $7,000 Wairoa $297,500 $19,500 Grey $260,000 $9,000 Buller $252,000 $8,400
