The white-hot Auckland housing market has continued its searing upward momentum, with the average price climbing to $676,053 in October, up from $662,976 in September.
According to latest figures from government valuer Quotable Value (QV), Auckland's prices have risen some 14.5% in the past 12 months.
And, also according to QV, Auckland's less likely to be affected by the recent lending limits applied by the Reserve Bank than other regions.
Auckland values are now 23.7% above the previous peak in 2007. When adjusted for inflation values are up 13% over the past year and are 6.6% above the previous peak.
Nationally, the picture is a little more sedate, with the nationwide average price rising to $457,312 in October, up from $452,535 in September.
The rise in the past 12 months is 8.9%, which is up on the 8.4% annualised rate recorded in September. This means prices are now 10.4% above the previous market peak of late 2007. When adjusted for inflation the nationwide annual increase drops slightly to 7.4% and values remain below the 2007 peak by 4.8%.
A year ago the Auckland average price was $590,231, while nationally the average price was $420,048.
As of October 1 the Reserve Bank introduced "speed limits" on high loan-to-value (LVRs) lending, principally to protect financial stability, but also with the intention of cooling the house market.
The RBNZ is picking annual house price inflation to peak at about 10% within the next six months and then fall - to about 4% - by the end of next year. It expects that the LVR measures could trim 1 percentage to 4 percentage points - or to take a midpoint, say 2.5 percentage points - off house price inflation.
The latest QV figures, like those from Auckland's biggest real estate firm Barfoot & Thompson, suggest no immediate impact at all on the housing market from the LVR limits.
However, with many deals and mortgages likely to have been in place before the start of October, any real impact from the LVR moves is more likely to be visible from this month on.
A lack of supply of housing in Auckland is seen as a key problem, with an estimated shortage of about 30,000 houses.
The Government and the Auckland Council have recently entered into an Auckland Housing Accord, through which it is aimed to add a further 39,000 houses in the Auckland region over the next three years.
The process to create "special housing areas" has already begun in Auckland and the first of these were named recently. A further announcement on more special housing areas is expected later this month.
QV.co.nz research director Jonno Ingerson said that as had been the case for some time, current nationwide value increases were largely driven by Auckland and Canterbury.
"Most of the rest of the main centres are also increasing but at a slower rate. In contrast, many of the provincial and rural areas have declined in value."
Ingerson said the LVR caps had the potential to have "a considerable impact" on the market.
"By limiting lending to buyers with a low deposit this will cause those people to reconsider their options. Some will choose to hold off and save more, some will find other sources of money to boost their deposit, and others will lower their price expectations. It will take some months before any evidence of this becomes clear."
If a significant number of these first home buyers dropped out of the market then volume and values would be affected, Ingerson said.
"In Auckland and Canterbury in particular where there is very high demand for property, the impact may be felt less.
"If some first home buyers decide to drop out, there will still be other willing buyers. The lower number of first home buyers also offers opportunities for property investors.
"First home buyers are often driven by emotion and a desire to get into the property market. As a result they may pay more for a particular property than investors who are considering more whether the investment stacks up for a particular sale price.
"Outside of Auckland and Canterbury, and particularly in the provincial areas where demand is lower, the LVR caps may have a larger impact. The removal of first home buyers will leave a gap in the market that may not be filled and so prices would decrease further."
Here is QV's regional breakdown:
Auckland
Values across Auckland are continuing to increase well, up 13.6% above last year. Waitakere still leads the way with values up 18.4% over the past year, with North Shore and old Auckland City not far behind though, at 16.2% and 15.1% respectively.
Over the past three months, Waitakere, North Shore, old Auckland City, Papakura and Manukau have each risen 5-6.5%, whilst the outer areas such as Franklin and Rodney are considerably behind, each only seeing just over 1% growth.
Within these areas, all of Manukau is performing well, with Manukau East, Central and North West each seeing over 5% growth in the past three months. Auckland City East has seen values increase 6.2%, whilst North Shore Onewa remains the highest at 7.9%.
QV Valuer Bruce Wiggins said “With the LVR restrictions having come into play, over the past month we have seen fewer potential buyers at some open homes with some properties not selling at auction and having to be relisted. In saying this, the lower end of the market is still buoyant thanks to the high number of investors, although we haven’t seen this affect rental prices as yet.”
“In the mid to high range, properties inside the zone for both Auckland Grammar and Epsom Girls Grammar have always been popular, we have seen some recent sales of similar properties that are both in the zone and out of the zone with up to a $500,000 difference in price.”
Hamilton and Tauranga
Values in Hamilton are still growing slowly, now up 1.7% over the past three months, and 5.1% over the past year.
QV Valuer Richard Allen said “Although the LVR changes seem to have had little impact on sales in Hamilton so far, there has been a slight impact on new building projects. There also seems to be a lack of listings across the market still.”
Tauranga continues to fluctuate within a small range, with values now 0.7% above this time last year and 1.2% over the past three months.
Wellington
Values across the Wellington area have been pretty flat, now sitting 2.3% above this time last year. Areas within the region have been relatively volatile over the past few months. Lower Hutt has seen the highest increase over the past three months at 1.2%, with Upper Hutt and Wellington City having declined.
Values in Lower Hutt now sit 4.1% above this time last year, however all other areas have seen an increase no higher than 2%.
QV Valuer Kerry Buckeridge said “We have started to see second tier lenders enter the market more with first home buyers, especially in less expensive areas, as they become a more competitive option since the LVR changes.”
“There seem to be more investors in the market also, with properties showing development potential, especially in-fill, being snapped up.”
Christchurch and Dunedin
Christchurch values are still significantly above this time last year, with more growth seen recently. Values are now 11.8% above last year and 2.7% up over the past three months. Apart from Banks Peninsula, which is down 6% over the past three months, all other areas have increased with the Southwest area of the city seeing a 3.9% increase.
QV Valuer Daryl Taggart said “Within the market we are seeing buyers who know their financial limits and who come to auctions or negotiations sticking to their bottom dollar. However, we are seeing fast turnarounds at the same time.”
“Developers are seemingly comfortable purchasing TC3 land and then paying any extra costs to develop the land, such as engineering costs. Rebuilds in the city are coming along well, however Selwyn still leads the way with new builds.”
Dunedin remains fairly steady, with values increasing slightly. They are now 2.7% above last year having seen a 0.8% increase over the past three months.
QV Valuer Duncan Jack said “The market remains steady with LVR changes yet to have a significant effect on value levels in Dunedin. There is a slight lack in listings and good demand across different price ranges.”
Provincial centres
Most of the provincial centres are still experiencing growth. In the North Island, Whangarei, Taupo, Gisborne and Palmerston North are all up 2-3% over the past year. New Plymouth is up considerably, with 5.3% year on year growth and 2.1% growth over the past three months.
Napier is a key area that has seen a small decline over the past three months, with the LVR changes already starting to impact first home buyers.
In the South Island, annual growth seems to be generally a little higher than provinces in the North Island. Ashburton, Timaru and Central Otago have all seen annual growth of over 6%, whereas areas such Kaikoura, Invercargill and Southland have seen limited growth if not a decline over the past year.
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27 Comments
A lack of supply of housing in Auckland is seen as a key problem, with an estimated shortage of about 30,000 houses.
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Well it would be:
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80% of our population growth in the last couple of decades has been the net inflow of non NZ citizens .
“Among policy and analytical circles in New Zealand there is a pretty high degree of enthusiasm for high levels of immigration. Some of that stems from the insights of literature on increasing returns to scale. Whatever the general global story, the actual productivity track record here in the wake of very strong inward migration is poor. In an Australian context, the Productivity Commission – hardly a hot-bed of xenophobia or populism – concluded that any benefits from migration to Australia were captured by migrants and there were few or no discernible economic benefits to Australians. And that was in a country already rich and successful and with materially higher national saving and domestic investment rates than those in NZ.”
http://www.treasury.govt.nz/downloads/pdfs/mi-jarrett-comm.pdf
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“Immigration and tax breaks for investment in residential property are being cited as the underlying causes of steep increases in the cost of housing over the past decade.
http://www.stuff.co.nz/business/money/4622459/Government-policies-blamed-for-house-prices
Exactly right. Migration over the past 30 years has only inflated house prices and done very little else of benefit to other NZers.
We need to restrict immigrants to only the most able and most willing to contribute. Adding poorly educated penniless migrants from non english speaking countries is absurb, but unfortunately common.
The decision of who to allow in needs to be made extremely carefully, yet at the moment it is done with reckless abandon.
complete rubbish.
30 years ago NZ/Auckland was a dull sleepy grey backwater. The vibrancy and diversity of immigrants are what have changed this. Go and eat dumplings on Dominion Road at 4am, go check out Diwali fireworks, lantern festival in albert park.
Not to mention earlier immigrants from europe/dalmatia who setup the wine industry.
I could go on.
Yes ... loathe as I am to criticize the wonderful Chris_J .... but NZ is far advanced from the dreary grey old 1960/80's ...
... and much of that reinvigoration has come from immigrants arriving legally ( not you , Ahmed Zaoui ! ) , and sitting up new businesses here , bringing their cultural mores with them ...
Diversity can be good. Dated a Kiwi Chinese and South African Indian in the last couple of years.
But better they trickle in than flood in. Can't help wondering how an Asian country's local population would react to their European numbers growing from 2-25% in a short space of time. Rioting I would think especially if they were out bidding the locals in property.
Guess in the 50's and 60's it was Poms
Will the real New Zealand (of the past) Stand Up!?
The Half Gallon Quarter Acre Pavlova Paradise[1] was a popular book by Austin Mitchell, published by Whitcombe and Tombs (Christchurch, 1972), with illustrations by Les Gibbard. It provided a witty, satirical description of life in 1960s New Zealand, and Kiwi culture.
Described as "a celebrated vision of New Zealand as heaven on earth",[2] the book was a great success in New Zealand. The phrase "Half Gallon Quarter Acre Pavlova Paradise" soon became part of the New Zealand vernacular, with the term "quarter acre pavlova paradise" being included in the Dictionary of New Zealand English.[3] Mitchell revisited New Zealand 30 years after writing his original volume, and motivated by the social changes he observed, he penned a sequel entitled Pavlova Paradise Revisited.[4]
http://en.wikipedia.org/wiki/The_Half_Gallon_Quarter_Acre_Pavlova_Paradise
30 years ago NZ/Auckland was a dull sleepy grey backwater. The vibrancy and diversity of immigrants are what have changed this.
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How come so much great literature is based on the great diversity of life in mono cultural societies?
..
"Today, the mainstream media and the academic world take great pleasure in labelling our immigration policy prior to 1967 as “racist and exclusionary”. But this is a cultural Marxist assessment of Canadian perceptions, their culture and ethnicity. Canadians then were part of a Western world committed and strongly attached to the idea that every individual citizen of Canada should be treated equally under the law without discrimination based on race, national origin, or religion. They were not racist, but merely ethnocentric, that is, a people with a natural and normal preference for their own ethnic traditions. Ethnic groups throughout the world exhibit a preference for their own culture and a disposition to judge other cultures by the standards of their own religion and customs. But today in the Western world, ethnocentrism is looked down upon as an attitude that contravenes the “universal brotherhood of humanity” to be manifested in Western multiethnic and multicultural societies. As diverse ethnic groups come into contact with one another, inside Western countries, our liberal elites bow to the importance of “understanding” other cultures and overcoming one’s ethnic prejudices. Europeans still exhibiting strong attachments (to their age-old cultures) are said to be bogged down by “irrational fears”.
But recent scientific research shows otherwise: ethnocentrism is a healthy and practical evaluation of one’s ethnic identity and interests consistent with evolutionary theory and cultural sophistication. This is the argument ethnocentric individuals can opportunely take from a scientific paper published in Psychological and Cognitive Sciences (January 2011), with the fitting title: “Oxytocin promotes human ethnocentrism”. Written by a research team at the University of Amsterdam, directed by Dr. Carsten de Dreu, this article shows that oxytocin is a human molecule associated with in-group favoritism and out-group derogation. Through a series of experiments in which participants were administered doses of oxytocin, the researchers learned that “a key mechanism facilitating in-group cooperation is ethnocentrism, the tendency to view one’s group as centrally important and as superior to other groups” at the expense of an out-group.
How, then, did European Canadians come to accept the idea that it is racist and xenophobic to exhibit preference for one’s own ethnicity and heritage, while believing, at the same time, that every non-European ethnic group has a right to preserve its own culture inside Canada?
yes SK I agree immigration has really added a lot to Auckland, BUT.......it's the quantum that is the problem...I feel the balance was really good in the Auckland of the mid to late 90s....excuse me but I'm a bit nostalgic for the Akld of that era, it had the energy of the new migrants etc, but property hadn't gone silly and traffic was still sane
God knows how many Indian taxi drivers I have had in Auckland over the years who are engineers / doctors etc....that's just silly and not much good for them, not much good for us
I remember the first migrants being attracted by the Kiwi lifestyle whereas:
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"Those who chose to settle in Auckland came initially because they were advised, or discovered, that it had the edge in work or educational opportunities," Ms Krishnan says. "For migrants from China, issues of access to a vibrant Chinese community were very important."
http://www.voxy.co.nz/lifestyle/work-deciding-factor-migrating-auckland/5/98537
Tourism
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Many Chinese want to escape "the intensity of the urban population". In many cities there is a lack of personal space and the presence of smog, making a trip to New Zealand feel like an out-of-this-world experience.
http://www.stuff.co.nz/business/industries/8602673/Building-the-Chinese-connection
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Dizzying Pics of Hong Kong’s Massive High-Rise Neighborhoods
http://www.wired.com/design/2013/08/unbelievable-photographs-of-hong-kongs-crazy-high-rises/
SK, so the benefit to NZers from immigration is fast food, fireworks and lanterns???
Well they can fry chicken just as well in Kentucky!
So the benefit to your ordinary NZer is that Auckland is less dull?? Now it's grey, dirty and congested, filled with more people than it can handle, while the rest of the country is unchanged.
It certainly hasn't improved the individual NZer, all the benefits of migration go to the migrants.
To be factual I think that most of the immigrants to NZ from Asia are skilled migrants and most are working and contributing to the IRD here, a high % are in the high tax (30%) bracket - these taxes go towards supported majority of Maori in NZ (as much as 40% who are unemployed). Refugees excluded. The biz climate of NZ is also helped alot by these Asia immigrates, without which, there is really no reason for anyone to do biz with NZ - a country that prides itself solely on beautiful sceneries and tourism only? Even then, NZ is not known to be a tourist friendly country. Sadly, even the one product that stood out in the past - Milk and milk products, touted as the premium a decade ago - is not longer true of NZ.
Gee Rolo, what did we do prior to the 1990's when we had a better standard of living?
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Savings Working Group
January 2011
“The big adverse gap in productivity between New Zealand and other countries opened up from the 1970s to the early 1990s. The policy choice that increased immigration – given the number of employers increasingly unable to pay First-World wages to the existing population and all the capital requirements that increasing populations involve – looks likely to have worked almost directly against the adjustment New Zealand needed to make and it might have been better off with a lower rate of net immigration. This adjustment would have involved a lower real interest rate (and cost of capital) and a lower real exchange rate, meaning a more favourable environment for raising the low level of productive capital per worker and labour productivity. The low level of capital per worker is a striking symptom of New Zealand’s economic challenge.
”
http://www.treasury.govt.nz/publications/reviews-consultation/savingsworkinggroup/pdfs/swg-report-jan11.pdf
Thank you - that was a good report and yes, I found the extract on page 51 of the report. To clarify, my comment was not about the merit or otherwise of migration policy as per se (on a personal note, I'm all for restrictiing migration to preserve the pristine beauty of N!). Rather, my comments was prompted by the various threads of comments on the Chinese migrant community with thinly veiled contempt and racial intonation.
First of all - Chinese immigrants make up a small % of overall NZ immigrations. From the year 2004-2010: The highest % of immigrants were from UK & India (http://www.enz.org/migrants.html). Perhaps the pertinent question to ask is why the subtle shift in policy by policy makers to favour Chinese now over UK?
Secondly, supporting my earlier points, most Asian immigrants are skilled immigrants coming here to work (as opposed to UK immigrants coming to NZ to retire). These are the ones that contribute most to NZ economy. If you are migrating to another country to work, with a family or young children, does not vibrancy of city with educational opportunities be criteria/priority for choice of location? I think it is only natural. So instead of complaining that they all flock to AKL, perhaps NZ should really be working on making other cities more attractive? (Even Key thought that WLG was a dying city?)
If NZ is only interested in attracting rich retirees - that is fine except that in 10-20 years time there will be a different set of problems - that of aging population with a declining economy.
Don't worry Chris_J, they heard you and hopped onto the other shore
It's not up 0.02%.
It's up 1.97%. You are out by a factor of 100.
Annualised that is 23.67%.
That is white hot searing and ready for a crash.
If it continues at 23.67% per year, in ten years the avergae price will be over 4.5 million.
Clearly that's unsustainable.
With this sort of news we could have the NZ dollar rocketing uowards, and interest rates down for ever:
"ECB Cuts Interest rates in half"
Of course prices are going up:
The LVR legislation removed the bit players, and moved everyone down a notch (mid range bidders, now can only reach to the bottom tier).
All buyers are qualified. They know they must have better equity to make solid bids, not so much fishing about to get "max house for your current financial position". Now you have to aim lower....and be prepare to compete (bid higher) for less house (ie harder sellers mark to better qualified bidders)
Those in the game must compete for scraps, and be willing to pay more than other qualified bidders, just to remain in the game.
All they've done is kick the new players off the field, and moved everyone else down a notch until equity pools can be built up again. And new players lose to higher rents and less ability to start nestegg-ing their core equity.
It's not like everyone wasn't warned.....
Forget about supply and demand, it's just all about MONEY and if you have plenty of it you can live in Auckland. It's not about freeing up land either because there is next to none in close proximity to the CBD so your just going to have to pay the dollars to get in close enough to commute to work and even more if you want the right school that parents are obsessed with these days.
Sitting at the breakfast table this morning I'm looking across the valley at the new housing in Long Bay on the North Shore. There will not be a single property over there worth less than $1.2 Milllion by the time they are finished. You can easily see why the average house price is rocketing up when they build 5 and 6 bedroom mansions.
Don't ask me where the money is coming from because working in NZ your paid peanuts in comparison to what the average Auckland house now costs. So glad I bought 10 years ago because now I would simply be unable to afford to.
Buy yourself an early xmas pressie, SK.
http://www.moretvicar.com/collections/the-daily-mash/products/the-daily…
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