Slowing growth trend continues - QV

Queenstown has joined Auckland in the one million dollar club

The latest QV House Price Index shows that national residential values increased by 2.0% over the past three months and by 12.4% year-on-year to hit an average value of $624,675.

Once adjusted for inflation, the annual increase dropped slightly to 12.1%, which leaves values 27.8% about the previous market peak in 2007.

However, the annual value increase recorded in November was at the slowest rate since May 2016.

In a similar vein, Auckland’s average value rose by 3.7% over the past three months and by 12.8% year-on-year to reach $1,051,387.

Once adjusted for inflation, the annual increase came in at 12.6%, which left it 63.1% above the 2007 peak.

But November saw the slowest rate of increase in Auckland’s annual value increase was the slowest since January 2015.

QV national spokesperson Andrea Rush said the latest round of LVR restrictions have led to a weaker than normal spring.

A reduction in demand for investor housing stock has resulted in more subdued value growth and has seen nationwide quarterly growth to ease back, she said.

“While values continue to rise in most parts of New Zealand, the trend of a slowing rate of growth continues for Auckland, Hamilton, and Christchurch.

“The Wellington market which had previously been very buoyant has now also started to see some of the heat coming out of the market as the new LVRs take effect there.”

Some markets did buck this trend – and in one market values have skyrocketed to approach those of Auckland.

The QV data shows that the Queenstown District has joined Auckland to become New Zealand’s second million dollar market.

In November, Queenstown’s average value topped $1 million – coming in at $1,000,205.

Rush said the district had seen a massive 32.2% year-on-year rise in values.

Regional centres with entry level properties under $300,000 are also not seeing the same impact from the new LVRs, she said.

“Many regional centres continue to see strong demand and value growth including the Hawkes Bay, Rotorua, the Hauraki and Waipa Districts and Dunedin.”

However, while the Auckland market might be seeing some impact from the latest LVR restrictions, its story as-ever is more complex than it first appears.

Rush said the latest CoreLogic buyer classification data shows the LVRs haven’t yet led to a significant decline in the share of sales going to multiple property owners (MPOs) in the Auckland market.

The share of Auckland sales to MPOs has remained at 43% since the LVRs were introduced.

It’s currently a tale of two different markets in the Super City, QV’s Auckland general manager Jan O’Donoghue said.

“We are continuing to see strong demand in the $1.5 million dollars plus bracket and the new build market which is resulting in high sales prices being achieved for these properties.”

“But at the same time there’s been a significant reduction in demand for entry level investor housing stock, particularly in Manukau, over the past month.

“Sales prices for this type of property have reportedly dropped back by as much as 20 to 30% on what was being achieved earlier in the year.”

Additionally, a late surge of pre-Christmas listings has increased the sense that it’s currently more of a buyers’ market that it has been since the beginning of the year in some areas, she said.

“The new build and off the plan markets remain strong while demand for older apartments has eased off which may be due to investors having more difficulty raising finance to purchase them.”