This content was supplied by QV.
Let’s face it — every residential market in New Zealand was hot during 2021. But which markets were the hottest? The latest QV Quartile Index shows just how quickly first-home values have risen across the country this year.
With December’s figures still yet to be finalised, the biggest gains in first-home values across the main centres over the 11 months from 1 January to 30 November 2021 occurred in Papakura (41%), Christchurch (37.7%), Franklin (33.7%), Napier (30.2%), and New Plymouth (30%).
Outside of New Zealand’s main centres, first-home values increased by an even greater percentage in Stratford (59.8%), Waitomo (57.2%), Wairoa (48%), South Taranaki (45.4%), and Kaipara (44.3%) — all districts that boast average home values well below the national average.
QV spokesperson Simon Petersen commented: “No matter how you slice the data, 2021 has been an absolutely bumper year for New Zealand’s residential property market. We all thought 2020 was a big year, and yet values increased by less than half as much on average as they have this year.”
“2021 has certainly been action-packed. We’ve seen the return of loan to value ratios, rapidly rising debt-to-income ratios, high inflation, low-but-rising interest rates, and a raft of significant tax changes designed to take some of the steam out of the market. Just about the only thing we haven’t seen this year is significant drops in home values.”
Although Mr Petersen didn’t expect to see significant drops next year either, QV’s latest figures demonstrated a substantial shift in momentum from the 25% most affordable homes, the ones typically targeted by first-home buyers and investors in the lower quartile, to the 25% most expensive houses in the upper quartile.
In the eight months leading into spring, first-home values increased at an average rate of 6.8% per month across NZ’s main centres, slightly higher than the average rate of growth in the upper quartile (6.6%). Since September, that rate of growth has slowed to 5.9%, while upper quartile properties have increased in value at an average rate of 8.8%.
“This spring swing from entry-level properties to the far more expensive homes at the top of the property ladder suggests that rising interest rates and affordability constraints are starting to bite first-home buyers, who will be finding things even more difficult right now. As a consequence, that section of the market is slowing, while people further up the ladder will still be able to use the sizeable gains they’ve made over the last year to trade their way up.”
“I’d expect to see this trend continue next year, with interest rates highly likely to rise further, making things even more difficult for first-home buyers in the foreseeable future,” Mr Petersen added.
He said Auckland was a prime example of this shift in price pressure from the bottom of the property ladder to the top, with entry-level home values increasing by an average rate of 5.9% in the November quarter, compared to 9.4% in the upper quartile.
It was a similar story in Wellington, where the region’s most expensive house values increased at a far greater rate than their more affordable counterparts this quarter — often dramatically so. In Hutt City, for example, entry-level home values went up by less than half as much as their most expensive counterparts in the last three months.
Even in one of NZ’s most affordable housing markets, Invercargill, the rate of first-home value growth has gradually declined from a 2021 peak of 13.5% in the three-months to March, to just 1.4% in the most recent quarter. Meanwhile, the value of the city’s most expensive houses increased by 6.7% over the same period.
The only main centre where the rate of first-home value growth has not trended downward as the year has gone on is Christchurch, which hit an annual high growth rate of 15.3% in the three months to November 2021.
“Although we haven’t yet seen any impact in Christchurch from the tightening of lending, the increase in the OCR, and rising mortgage interest rates, that will likely change in 2022,” Mr Petersen added. “I have a feeling we’re not going to see another year quite like 2021 again.”
98 Comments
With the NZ government's 2021 Resident Visa released in September, there's going to be thousands of newly minted kiwi Indians joining the Auckland home ownership ladder to provide a price floor at current values. Basically, these Indian fellas will get their parents to sell their assets in India and then use that as the deposit to borrow against to buy a house here and support their CHAIN MIGRATION STRATEGY to bring all their cousins, siblings and elders to NZ. The good thing is they mostly purchase the 5-6 B/R homes in the outskirts of the city due to this mentality and to give the impression of being wealthy and high status vs. locals who prefer to buy the 2-3 B/R homes in quality, infill regions with access to good amenities. Given the thousands of Indians to receive their resident visas, this gives HUGE confidence that the housing market is going to be great and 2022 will be a stellar year for many investors.
I'm always writing comments asking for legal immigration to be reduced (to numbers similar to other developed countries - about a third of the usual 45k) but this comment goes too far. No need for emotive phrases in CAPITALS. It is very difficult to bring in family members; this was tightened up in a dramatic and typically arbitrary way many years ago. Is a rational debate about immigration impossible?
Yeah Gen X are all slaves out on some Thai fishing trawler that has not seen land for 2 years, no rest working 7 days a week, poor food and they are not getting paid a cent and if they die they just get thrown overboard. Got to feel sorry for the poor Gen X, talk about exploited.
In the last 20 years we have added over 1 million population. When will they retire? Who will pay the taxes to support their superannuation? Clearly NZ is not densely populated and it can easily feed every resident but this process of bringing in docile 3rd world immigrants and paying them badly in order to keep Kiwi pensioners happy cannot continue forever and is progressively impoverishing us. But for moral reasons it ought to stop now.
My preference is for stability and/or decline in population but I wouldn't go so far as to say I'd never vote for a party supporting an increasing population - there are worse things than immigration to consider. But as you say nobody listens (well that isn't true - informal conversation over a coffee or a beer and you get plenty of strong opinion on both sides of the issue) and is willing to debate the issue publicly. Meanwhile those vested interests with influence over our politicians keep the pressure on for more low paid chefs and tourist guides.
agree
Head in the sand. Fonterra did more pollution and steal resources for export than all the immigrants combined.
These people have brought in skills and culinary that were lacking.
They pay taxes which then expand , without scale you will still be living under the rock (looks like you are tbh)
I agree, there is a different view though
Owner of Hamilton takeaway shop Refuel Jo admits 'I am a racist' after refusing to hire Indians
https://www.google.com/amp/s/www.newshub.co.nz/home/new-zealand/2021/07…
Supposedly due to COVID and lockdown delay issues
https://www.newshub.co.nz/home/money/2021/11/rating-valuations-for-auck…
However it may also be a reluctance to lock in the high prices from 2020/2020 into the RVs for the next 3 years.
Werner’s recommendations for today’s economic conditions are to reform the money system by: banning bank credit for transactions that don’t contribute to GDP; creating a network of many small community banks lending for productive purposes, returning all gains to the community; and making bank behavior transparent, accountable and sustainable. Link
...that's the crazy thing .....people say they have "checked out with their winnings", but what have they put their winnings into ??? ....leave it in the bank and it just gets eaten away by inflation up to 8-9%....buy another overpriced damp Auckland dump .......while the NZ sharemarket is going sideways at the moment, and overseas, well some of those markets are ready for a 20% correction, as if the Fed raise interest rates, the debt will be that much more expensive to pay off .......really just leaves gold, silver & precious metals which are heavily manipulated by much larger players ......so at the moment it just has to be ....... Cryptocurrencies !!! .....TO THE MOON !!!
Homebuyers in NZ are not speculating - they buy a house to live in. Investors buy property for a rental income stream.
Only a small minority of buyers are flipping or speculating.
So while prices are high it’s probably not a bubble, & the Govt & RB will never allow a major collapse.
This is incorrect. Investors are buying property for speculative capital gains, not for rental income streams. The yields are a very very long way from making any sense whatsoever.
It's a huge speculative bubble and it only inflates or collapses.
The reserve bank has gone to great lengths to emphasise that they do not target asset values.
The government is going to be powerless when it happens.
Hi Evil. You missed out greed from your list of criticism’s. Always first out the gate with a gloaty smarmy comment. I’m sure people don’t see it as missing out. That’s limited to the old folk… the ones you mock are potentially the future of NZ. I’d be a bit more supportive if I were in your position
Oh May 2020. Caught the bottom perfectly then?
In this particular thread we were discussing the speculative nature of the housing bubble and how the yields make little sense.
Everyone is entitled to express their opinion, but spastic hot-takes don't add anything of substance to the discussion.
You were repeatedly hassling "by the way" about the yield he get on his rental, not much of a discussion. Minding your own business would be much better rather than interfering in others lives, which is also what you did when commenting about what you think you know about my life.
Net yield is a key indicator to help determine investment versus speculation. If one wants to jump into a discussion and volunteer being "correct in my case" they should be prepared to answer simple relevant questions.
Thankfully, we quickly learned that they don't really understand the basics.
Jeez. Imagine having an ego so inflated that one thinks randoms on the internet care about or "interfere" with their life. 😂
There's no need to stoop to petty personal attacks or to edit your comments to conceal your misunderstanding of yields.
It's a speculative market and you made a speculative purchase. Everyone buying into the bubble is doing the same.
Now that we have reached the truth of the matter let's just call a spade a spade and move on.
There's no need to stoop to personal attacks you say?
What about this then?
by Brock Landers | 29th Dec 21, 10:26am
Is your brain misfiring again?
Oh yes. The same person that mixes up your / you're in every second post they wrote a blizzare rant because they appear to have misinterpreted the meaning of somebody's username.
Instead of the petty name calling that others might resort to, it was kinder to tactfully indicate that they may have made another grammatical boo boo.
As in the past this credit legislation will be watered down in time although it will help tap out credit for now. There will be a easing off in places like Auckland that have a higher spec element. The falls will be less than recent gains as without the credit market we end up with higher levels of illiquidity overall. Those wishfully hoping for massive price falls suggest you looking into sticky prices and how they relate to the RE market. Divorces and estates are not resolved quickly.. regardless how many times it mentioned on here.
@MortgageBelt "Homebuyers in NZ are not speculating..."
The cost now for a first home requires close to 30 years to pay off on an average salary. However average time to hold on to a home in NZ is only 7.4 years. So what we are doing is still selling our first home within 7 years of buying it, and using the capital gains to move on to a nicer home. We are not buying homes with the intention of paying the whole thing off. We are speculating.
This can be proven simply; when RBNZ required banks to prove buyers' ability to pay the whole loan off, the whole market grinds to a halt. It's not even an argument. The housing market is a bubble. And don't think of it as a collapse - it's a correction.
Not really mate, what you need in a house constantly changes over the years for most people. The fist house I bought in Auckland was on the market because they said the back yard was non existent for the kids to play in. Any number of reasons to be upsizing, moving to a better area in terms of school zones etc and then in later life downsizing. The motive is generally not to make money, its about lifestyle. Some people on here have weird ideas about housing and at some point they need to sit down and be honest and just admit they screwed up.
It’s not just about choices and willingness, it’s also about ability to pay. What people are pointing out is it isn’t possible for people to buy and pay off a mortgage at current prices.
You aren’t ‘toughing it out on your mortgage.’ If you aren’t paying it off during your working life. You are just over leveraging yourself.
FHB in the last 12 months would outnumber those who think they cannot buy a house on here by about 1000 to 1. Its funny we don't find many FHB on here, perhaps they read some of the comments on here and simply cannot be bothered engaging the same few people. Not sure about a shameful period, its just been right place right time, pretty much the same with many things in life.
Speaking to a mate, he will take his savings out ( inflation ouch ) and put it in a rental or landbank
There has been a lot of speculation and froth over the past 18 months or so in the sharemarket, volatility will continue
Property is much safer he reckons - I dont blame him
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