Big city values plateau
Wednesday 2 August 2017
Powerhouse regional markets are driving value growth in the property market while values in big city markets are flatlining.
By Miriam Bell
The latest instalment of QV’s monthly House Price Index shows that, in July, Auckland saw the slowest rate of annual value growth in over five years.
Once adjusted for inflation, average values in the region increased by 3.4% year-on-year while quarterly value growth plateaued at 0.0% for the second month in a row.
This left Auckland’s average value at $1,044,303 in July, as compared to $1,045,059 in June.
QV’s data shows that, much like Auckland, value growth in the country’s other big cities has now also slowed significantly.
Hamilton saw value growth of 0.4% over the past three months and 5.4% year on year, which left the average value at $540,840.
QV’s Hamilton valuer, Stephen Hare, said the heat has come out of the market, listings have increased and there was not the same buyer demand.
Christchurch values decreased by 0.2% over the past three months and rose by just 0.6% year-on-year, which left the average value at $495,098.
QV’s Christchurch valuer, Daryl Taggart, said the Christchurch market is stalling, with limited activity and properties increasingly harder to sell.
Big city markets drive the national property market, so their change in pace has left nationwide annual value growth at its slowest since February 2015.
Nationwide values grew by 4.6% year-on-year, once adjusted for inflation, and by just 1.6% over the past quarter.
.This left the national average value at $641,280 in July, as compared to $639,051 in June.
QV national spokesperson Andrea Rush said that while nationwide values are still rising, the growth is now being driven by regional and provincial centres rather than the largest cities.
The data shows that the flatlining value growth seen in the Auckland, Hamilton and Christchurch markets has now spread to other city markets.
Rush said that Wellington and Dunedin are also now experiencing a similar trend with quarterly value growth in both cities slowing to below 1.0%.
“Much of the slowdown in the markets is being caused by high prices and banks stricter lending criteria meaning it’s difficult for many buyers to raise finance to purchase and this is now constraining the market.”
However, she said that record high net migration continues and yet building consents are now trending downwards.
“So the underlying demand and lack of supply for homes remains in the market, particularly in Auckland.”
Meanwhile, the value growth in many regional markets stood in stark contrast to that of the big cities.
The Queenstown Lakes District and Hastings led the way with both regions seeing 20.0% year-on-year value growth.
Napier, Rotorua, and Whangarei were close behind, with year-on-year value growth of 18.4%, 17.8% and 17.2% respectively.
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