Wednesday 7th August 2019
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Falling house prices in Auckland continue to keep a lid on national house price inflation although some regions are still posting double-digit price increases.
Prices across the Auckland region were down 2.6 percent in July on average compared with a year earlier, whereas prices across Dunedin were up 11.7 percent.
Extreme outliers include Otorohanga where prices were up 35.5 percent on a year earlier, Kawerau, where they rose 29.2 percent and South Waikato, where they rose 24.2 percent.
QV says the figures are for July but its indices are based on settled house sales and are prepared on a three-month rolling average basis, so its data can include house sales that went unconditional as long ago as April or even earlier.
QV’s official national index for July is up just 2.2 percent to $687,683 from a year earlier and up just 0.1 percent from the three months ended June.
General manager David Nagel says the latest results continue recent trends of sluggish value growth and low supply overall but with pockets of strong growth.
“The regions that continue to see the strongest value growth, such as the Bay of Plenty, Hutt Valley and Porirua, are generally those offering more affordable property in areas where the local economy provides plenty of job prospects within a commutable distance,” Nagel says.
Whakatane, for example, in the eastern Bay of Plenty, recorded an 11.4 percent annual increase while prices in Upper Hutt were up 15.9 percent.
The biggest price falls in the Auckland region were the North Harbour part of the North Shore and the islands, both down 4.8 percent. North Shore prices overall were down 4.3 percent.
By contrast, prices in Papakura to the south of Auckland were down just 0.4 percent and in Franklin were actually up 1.3 percent on a year earlier.
Nagel says a key driver in Auckland are affordability constraints, noting prices in many areas of the city have risen more than 90 percent since the previous cycle's peak in 2007.
“This sustained period of value growth since the peak has gradually pushed many buyers out of the market,” he says.
But areas such as Christchurch, where the average house price is $498,006, is up 31.3 percent since the 2007 peak. “It’s regions such as these that still have plenty of scope for growth in the coming years as they continue to attract buyers seeking more affordable property.”
Nagel says investors will have been impacted by key government policy changes such as new rules on insulation but QV isn’t noticing any major changes in investor demand.
“In fact, it’s the first-home buyers who appear to remain busy as they snap up properties, particularly in the wider Wellington region.”
Across the Wellington region, prices were up 8.5 percent but the increases ranged from 3.4 percent for the western suburbs to 11.2 percent in Porirua.
Nagel says market conditions appear to be stable and QV isn’t anticipating any major changes. Record low interest rates will probably support continued steady buyer demand, although he still expects the usual spring lift in both listings and sales volumes.
The Real Estate Institute’s monthly data, which records unconditional sale agreements in July and so is much more timely, will probably be released next week. It’s most recent data showed national annual house price inflation of 1.7 percent for the year ended June and 6.5 percent excluding Auckland, the same as the annual figure for May. Auckland prices were down 3.5 percent from a year earlier.
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