New Zealand’s property market may see a mini bounce back in the final two months of 2021, but conditions for a sustained upswing are unlikely to materialise, according to an industry data provider.
The pace of growth in average property values in the land of the long white cloud has slowed significantly from a quarterly rate of 8.1 per cent in April to 4.8 per cent by September.
The CoreLogic New Zealand Quarterly Property Market and Economic Update also showed property values have risen 1.4 per cent in September and by 4.8 per cent in the September quarter.
The annual growth rate stands at a record high of 27.8 per cent, with the average property value now $950,229.
But CoreLogic NZ Chief Property Economist Kelvin Davidson said the figures indicated that the market may have peaked and sales activity and price growth should ease further in 2022.
He said while lockdowns had “muddied the waters” in August and September, there may be a mini bounce back when restrictions eased in Auckland, it should be “short-lived”.
“Sales activity and property value growth have been cooling for a few months now, with stretched affordability likely to have been one factor subduing demand and leading to a few would-be buyers holding back,” Mr Davidson said.
“The pace of growth in average property values has slowed from a quarterly rate of 8.1 per cent in April to 4.8 per cent by September, which is still pretty strong, but the slowdown is genuine and has further to run.
“Some parts of the country have actually seen average values go backwards in the past couple of months.
“It wouldn’t be a surprise to see single digit gains in property values next year, perhaps around the five per cent mark.”
The report also highlighted low supply as an issue affecting much of the country, with the total stock of existing properties available for sale running at multi-year lows.
“In some ways there is a vicious cycle going on for listings, with some existing owner-occupiers not moving house because they don’t have much choice about their next property,” the report said.
“Of course those owners are then not listing their own house, which feeds back into even tighter supply conditions.”
First-home buyers have remained active in the market with many using KiwiSaver for their deposit and taking advantage of the owner-occupier lending speed limit, which allows them to buy a home with less than a 20 per cent deposit.
But things are about to get a bit tougher, with the Reserve Bank cutting the low deposit allowance to only 10 per cent from November.
The number of mortgaged investors has already fallen due to higher mortgage rates, low gross rental yields and tighter regulations.
Their market share of property purchases has dropped from 29 per cent in the March quarter to 24 per cent now.
Auckland
The average value of housing stock in Auckland increased to $1,346,964 in September, with each of the seven sub areas across the city recording average value rises of 25 to 27 per cent since September 2020.
But it appears growth rates are slowing with the average value of housing stock in Auckland City rising 0.6 per cent in September compared to 6.5 per cent since June.
The average value of a property in Auckland City is now $1,589,737. The next highest is $1,509,562 on the North Shore, followed by $1,234,444 in Rodney.
Hamilton
Hamilton’s average property values have risen 2.7 per cent since June and are now 27.1 per cent higher than a year ago.
The average value of a property is $823,283.
In September, the most price growth was seen in Hamilton South East where the average value increased 6.2 per cent to $767,831.
Hamilton North East is the most expensive area to buy, with an average property value of $1.007 million.
Tauranga
Tauranga’s average property value cracked the $1 million mark with a rise of 7 per cent since June.
It’s average property value is now $1,046, 390, which is 31.6 per cent higher than September last year.
Wellington
The average Wellington property value now sits at $1,082,993, with Wellington City the most expensive place to buy at $1,213,032.
In September, Carterton experienced the most price growth, up 5.5 per cent to an average property value of $719,181.
The cheapest area to buy in is Masterton, where the average property price rose 2.2 per cent in September to $645,693.
Christchurch
Christchurch offers good value with an average property price of $666,371.
Since September last year the average property value in Waimakariri has climbed 30.5 per cent to $613,048.
But in September the area with the most growth was Selwyn, at 3.3 per cent, where the average property value is now $743,115.
Christchurch Hills is the most expensive area with an average property value of $907,321.
Dunedin
Property values have risen about three per cent across most of the city in the past three months, with the average value of a Dunedin property sitting at $672,031.
However in September, values dropped in two out of four areas.
The value of a property in Dunedin South fell 2.2 per cent in September to $628,221, while in the Peninsula and Coastal region they dropped 0.3 per cent to $625,005.
Property values increased 0.1 per cent in September in Dunedin Central and North to $691,380, while in Taieri, the average value of a property rose 1.9 per cent to $709,483.
