Average house values have begun falling in most of Hamilton and many parts of Auckland as the housing market cools, according to the latest figures from Quotable Value (QV).
The QV House Price Index for January shows average residential property values have fallen for two months in a row on the North Shore and in Waitakere and Manukau, but are continuing to rise in the rest of the Auckland region.
In Hamilton average values have fallen for two consecutive months in the north east, south east and south west suburbs, and fallen for one month in the central and north west suburbs (see table below).
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However average values continue to rise in most other parts of the country, with the average value of homes throughout the country hitting $631,302 in January, up 13.5% compared to a year earlier.
And average values in Auckland and Hamilton remain well up on a year ago, with the average value of an Auckland home at $1,047,699 in January, up 12.8% compared to a year ago. And in Hamilton the average value was $531,337, up 18.6% compared to a year ago.
QV Homevalue Auckland manager James Steele said prices in Franklin and Pukekohe on the city’s southern flank remained strong as buyers looked further afield to find more affordable properties, and there had been a similar trend in the north of the city in Rodney.
“Meanwhile, the Waitakere, North Shore and Manukau housing markets have been slow going with vendors having to adjust their price expectations down to sell and open home attendances have been slow from November through January,” he said.
In Hamilton a two speed market had developed.
“We continue to see two tiers in the Hamilton housing market with properties above $550,000 continuing to attract buyers and those below $550,000 failing to sell at auction and taking longer to sell,” QV Homevalue valuer Stephen Hare said.
This was because investors were less active in the market and there was less competition for first home buyers, he said.
Other districts around the country where average values declined in January compared to December were Kaipara, Otorohanga, Waitomo, Opotiki, Wairoa, Stratford, Tararua, Wellington City West, Tasman, Kaikoura, Buller, Grey District, and Gore.
All other places apart from Auckland and Hamilton posted gains in their average values (see chart below for average values throughout the country):
| QV House Price Index January 2016 | |||
| Territorial authority | Average value January 2016 | 12 month change% | 3 month change % |
| Far North | 389,811 | 18.6% | 8.3% |
| Whangarei | 463,319 | 19.8% | 2.5% |
| Kaipara | 463,896 | 25.9% | 6.4% |
| Auckland - Rodney | 933,456 | 13.7% | 1.6% |
| Rodney - Hibiscus Coast | 908,966 | 12.8% | 1.3% |
| Rodney - North | 961,450 | 14.5% | 2.3% |
| Auckland - North Shore | 1,214,291 | 12.5% | -0.5% |
| North Shore - Coastal | 1,387,368 | 13.2% | -0.3% |
| North Shore - Onewa | 971,364 | 11.2% | -1.9% |
| North Shore - North Harbour | 1,189,924 | 12.8% | 0.9% |
| Auckland - Waitakere | 836,574 | 13.6% | -0.1% |
| Auckland - Central Isthmus | 1,225,096 | 12.1% | 1.3% |
| Auckland City - Central | 1,065,420 | 12.0% | 2.4% |
| Auckland_City - East | 1,532,815 | 12.3% | 2.4% |
| Auckland City - South | 1,107,912 | 11.9% | -0.4% |
| Auckland City - Islands | 1,036,288 | 14.8% | 0.3% |
| Auckland - Manukau | 901,422 | 13.7% | -0.5% |
| Manukau - East | 1,158,197 | 13.9% | -1.3% |
| Manukau - Central | 686,567 | 11.6% | -1.8% |
| Manukau - North West | 781,110 | 15.7% | 1.6% |
| Auckland - Papakura | 684,172 | 12.6% | 0.2% |
| Auckland - Franklin | 660,557 | 13.1% | 2.9% |
| Thames Coromandel | 645,780 | 16.9% | 3.6% |
| Hauraki | 359,520 | 30.3% | 10.8% |
| Waikato | 441,525 | 25.1% | 4.9% |
| Matamata Piako | 398,682 | 27.0% | 8.4% |
| Hamilton | 531,337 | 18.6% | -1.1% |
| Hamilton - North East | 678,886 | 20.1% | -1.2% |
| Hamilton - Central & North West | 489,611 | 15.9% | -2.2% |
| Hamilton - South East | 482,333 | 18.0% | -1.5% |
| Hamilton - South West | 466,235 | 17.5% | -0.3% |
| Waipa | 490,723 | 23.6% | 5.3% |
| Otorohanga | 243,964 | 9.2% | 0.5% |
| South Waikato | 188,852 | 32.9% | 8.2% |
| Waitomo | 172,405 | 13.4% | 4.8% |
| Taupo | 418,130 | 13.6% | 1.2% |
| Western BOP | 575,089 | 21.1% | -3.6% |
| Tauranga | 672,752 | 20.7% | 3.2% |
| Rotorua | 379,865 | 28.7% | 4.8% |
| Whakatane | 380,691 | 21.5% | 1.8% |
| Kawerau | 177,183 | 57.5% | 16.6% |
| Opotiki | 248,261 | 15.1% | -4.5% |
| Gisborne | 271,632 | 17.2% | 5.9% |
| Wairoa | 161,966 | 9.1% | -1.9% |
| Hastings | 392,182 | 21.1% | 7.1% |
| Napier | 419,099 | 20.3% | 5.8% |
| Central Hawkes Bay | 253,787 | 12.6% | 9.1% |
| New Plymouth | 415,761 | 11.3% | 3.3% |
| Stratford | 234,372 | 10.0% | 1.7% |
| South Taranaki | 198,934 | 3.8% | -1.4% |
| Ruapehu | 156,971 | 17.2% | 3.8% |
| Whanganui | 207,752 | 8.5% | 1.6% |
| Rangitikei | 163,111 | 8.8% | 2.5% |
| Manawatu | 289,350 | 13.1% | 4.3% |
| Palmerston North | 348,581 | 15.1% | 4.0% |
| Tararua | 163,877 | 4.3% | 0.9% |
| Horowhenua | 258,047 | 19.0% | 7.2% |
| Kapiti Coast | 482,723 | 22.7% | 5.4% |
| Porirua | 484,164 | 21.4% | 3.0% |
| Upper Hutt | 433,538 | 23.8% | 6.9% |
| Hutt | 482,632 | 23.5% | 4.8% |
| Wellington | 702,081 | 21.1% | 4.6% |
| Wellington - Central & South | 703,433 | 20.6% | 4.4% |
| Wellington - East | 753,259 | 19.3% | 4.3% |
| Wellington - North | 627,791 | 23.0% | 5.6% |
| Wellington - West | 808,685 | 20.5% | 3.0% |
| Masterton | 276,020 | 13.2% | 4.8% |
| Carterton | 321,476 | 18.0% | 4.8% |
| South Wairarapa | 370,839 | 15.7% | 7.5% |
| Tasman | 498,111 | 14.2% | 2.6% |
| Nelson | 508,343 | 16.4% | 5.0% |
| Marlborough | 423,753 | 14.7% | 3.2% |
| Kaikoura | 398,058 | 10.0% | 2.7% |
| Buller | 183,573 | -1.1% | -2.7% |
| Grey | 211,780 | 6.6% | 3.6% |
| Westland | 234,405 | 3.6% | 1.1% |
| Hurunui | 378,276 | 6.1% | 3.6% |
| Waimakariri | 434,854 | 3.5% | 1.1% |
| Christchurch | 497,539 | 2.8% | -0.2% |
| Christchurch - East | 371,157 | 0.8% | -1.5% |
| Christchurch - Hills | 667,077 | 2.0% | -2.0% |
| Christchurch - Central & North | 588,632 | 3.7% | 0.2% |
| Christchurch - Southwest | 477,247 | 3.9% | 1.4% |
| Christchurch - Banks Peninsula | 514,403 | 4.0% | 1.3% |
| Selwyn | 547,094 | 3.8% | 1.0% |
| Ashburton | 348,788 | 2.2% | -0.5% |
| Timaru | 335,449 | 7.1% | 0.6% |
| MacKenzie | 420,915 | 26.9% | 9.7% |
| Waimate | 229,085 | 7.5% | 4.4% |
| Waitaki | 260,433 | 12.2% | 3.2% |
| Central Otago | 411,111 | 18.6% | 0.6% |
| Queenstown Lakes | 1,032,560 | 30.7% | 6.0% |
| Dunedin | 359,055 | 15.5% | 5.1% |
| Dunedin - Central & North | 372,295 | 14.0% | 5.0% |
| Dunedin - Peninsular & Coastal | 320,180 | 12.9% | 4.8% |
| Dunedin - South | 342,080 | 16.7% | 4.6% |
| Dunedin - Taieri | 375,669 | 17.5% | 6.0% |
| Clutha | 190,208 | 12.2% | 3.5% |
| Southland | 236,549 | 9.6% | 7.2% |
| Gore | 200,826 | 7.4% | 0.7% |
| Invercargill | 239,252 | 11.0% | 4.3% |
| Auckland Area | 1,047,699 | 12.8% | 0.2% |
| Wellington Area | 582,322 | 20.6% | 4.2% |
| Main Urban Areas | 754,572 | 13.6% | 0.9% |
| Total NZ | 631,302 | 13.5% | 1.4% |
71 Comments
@fat pat , you could be right , but that generation is not wealthy , so they are not in the $1,0 million league and the median prices has a long way to go down .
My reading is that the Auckland market peaked in early 2016 , the feast is over , everyone is still in party mood, but there is still a hangover to come .
You might want to check the actual job listings.
https://www.seek.co.nz/jobs/in-All-Taranaki?daterange=3&isareaunspecified=false&sortmode=ListedDate
FYI,
- 20 jobs listed in 3 days.
- 1 job is a double post
- 1 is in Palmerston North (i.e. not Taranaki)
- 1 is South Taranaki about 20min drive to the nearest civilization, or an hour to NP or Wanganui.
- 1 has been up there solid for the last 3 years.
- 1 ad states "Please note this is NOT a salaried position. You must be prepared to back yourself!"
So I guess opportunities galore if you want a minimum wage job at the local Ryman village.
Easy to see who is from Auckland and who is from the provinces in this discussion. It is interesting that Aucklanders tend to view the rest of the country as second rate, however I note that Auckland didn't make the NPC semi finals last year - Taranaki and even Tasman were there.
I live in the provinces and have done so for the past 10 years.
It is correct, Jobs aren't always advertised, primarily because they are given directly to known family/friends. You can call it nepotism, corruption, or networking, it's up to you.
On the flip side, Several of those jobs will also only be listed for due process, i.e. the applicant has already been tapped and approved. But they have to advertise anyway.
Either way it is not much use if you are moving from out of the province and hoping to get a job.
Based on my contacts though, Jobs aren't being advertised simply because they don't exist. Ex colleagues, neighbours, friends, and local business owners are all noticing it.
You need to be a local to have a network and they don't like Aucklanders the second you get past Bombay so good luck getting a job down there. Also I have been to those places and wouldn't live there if you bought me a house. If it was so great everyone would be living there already. On the radio this morning, places 2-3 hours outside the three main centers are still going up in price. I can see the appeal of Tauranga, I cannot see the appeal of Taranaki.
Heaps of jobs out of Auckland. Remember there is a lot of cash flowing into our businesses that in Auckland flows only to banks as mortgage payments. My beautiful daughter is annoyed in her current job so on Monday night she applied for six jobs. Got an interview already. Last time she did this she got six interviews in six weeks.
New Plymouth booming? I wouldn't go that far.
Yes house prices have gone up substantially in the past 3 years. Enough, so that 400k wouldn't buy you a "Nice 4-bed house & decent section" within New Plymouth (or Bell Block). You might get a nice 3 bed though.
BUT, Sales are also slowing markedly, properties seem to be lingering on the market a lot longer than before. The prices also seem to have dropped slightly on the peak of about 6-9 months ago.
Also as Sleepydog mentioned, what jobs?
I live in NP (originally from Wgtn). It could still take me 20 minutes to drive the 7km to work (that was when I had a job)
Now, I have zero commute (and income), I get to sit at home and write inane posts online to occupy my time :-)
We have the same problems as Auckland just on a slightly smaller scale.
- Auckland is a 1.5mil city, built for 200k
- NP is a 65k city, built for 10k,
My point is, it is all relative. Personally I found the 20min commute in NP more annoying than the 1.5 hour commute in London. Simply because NP is "Small" - add another 20-30k people to NP and it would make Auckland traffic look like a F1 Grand Prix.
NZ builds reactive infrastructure. Until that changes it doesn't matter where you live, The underlying problems are nationwide. Just like it doesn't matter where you host the sevens, the event is dead.
Yes it is all relative
I lived in Melbourne for 30 years, south of the city, my son lives north of the city. The distance between us was 105 traffic lights or 35 kms and two hours commute time (1 way) anytime close to peak hour whereas between 9 pm at night and 5 am next morning it was a 1 hour trip with a high probability of half those traffic lights being red. During peak hour you wouldn't even bother.
Now relocated to a city south of Wellington, south of Cook Strait, and south of Cristchurch
We are 30 kms from the city and only 1 traffic light in the way - joy
Less of a decline than I was picking, although a slight decline from the $1,051,000 last month. However, the QV figures are based on settlement and the average for three months so lagged behind the real trends by about two months. The continuing sale of more expensive properties will also work to increase the mean price. In addition the comparison with last year was for a low month. What will be a big indicator is whether the stock of houses for sale has increased when the REINZ figures come out later in the month.
There are three things that have taken the steam out of the market and which are influencing market sentiment. And all these issues are widely reported and understood .
1) There is evidence that interest rates are going to go up , in a slow but sustained way and prices will need to adjust to the new normal
2) Migration to NZ is going to fall dramatically .The Government has changed the immigration settings which will only filter through and take effect in 2018. This is because those new migrants still arriving have been "in the system " for the past 18 months to 2 years . The immigration process can take 2 years , so there is a hangover period , which is where we are right now .
3) Auckland seems to be getting its act together w.r.t. the land availability issue , there has been land freed up for development and land rezoned more densely , so we can now build 100,000 new houses ( which at four people per household means we can house a quarter of Auckland's population ) .
The market is usually correct and when it goes too far , it always corrects even if it seems to take forever .
Yes the immigration settings reasons seem to be a bit overstated..
"The NZRP provides a planning range which allows flexibility to make fewer decisions at times of lower demand, such as when economic activity is depressed, while setting clear parameters for maximum numbers. The planning range for residence visa approvals for the 2016-17 and 2017-18 financial years is between 85,000 and 95,000".
https://www.immigration.govt.nz/about-us/media-centre/news-notification…
That aside, to win the election i'd say said Party will need to anounce a tighteneing.
3) Auckland seems to be getting its act together w.r.t. the land availability issue , there has been land freed up for development and land rezoned more densely , so we can now build 100,000 new houses ( which at four people per household means we can house a quarter of Auckland's population )
No, not in Auckland. Land is being blocked in Auckland and will remain so for the next 25 years. Ratepayers are subsidising the development of huge areas around Warkworth and Orewa and Kumeu and Pukekohe. Auckland builds new suburbs (with ratepayer subsidies) for any part of the Auckland Region apart from at Auckland City.
The Auckland Council continues to ban construction of houses north of Albany/Long Bay, ban houses around Swanson, ban houses between Westgate and Kumeu, ban houses south of Flatbush/Howick, ban houses east of Takanini, ban houses between Drury and Pukekohe. Auckland forbids the construction of houses around 90% of Auckland City.
The lunacy has continued.
Unaha-closp you obviously haven't done any development before because the ratepayers coughing for development infrastructure is far from reality.
You need deep pockets these days to do land development because there isnt any infrastructure around the developable areas you are generally talking about
The council is spending a lot of money on infrastructure development and you say they are achieving very little. That does make sense in the wider context of Auckland Council.
Perhaps fairer to say Auckland ratepayers are wasting a lot of money in the exurban developments.
Out of interest,
- what is the biggest property correction in NZ history?
- What is the longest period of consecutive negative house value growth?
- what is the historic trend of housing values?
I know the song "history never repeats", and there is a first time for everything, but humanity has shown we are not quick learners, and we do like to repeat the same mistakes time and time again.
So I wonder, based on history, is a large correction
a) probable?
b) possible?
Personally I don't think so.
Rising interest rates will take a few people out (as they always do) but in terms of prices returning to pre-2008 levels. That would require an absolute catastrophe, to the point where the value of your house is probably the least of your worries.
As for an ongoing gradual decline, prices still wouldn't return to 12 months ago within the next 10 years. You would be looking at decades (if ever) to return to pre-2008 levels.
Granted this could just be the start of the slide. But that brings me back to the original questions - what do the previous slides look like?
Prices don't have to return to a 2008 level to be a catastrophe.
For an average Joe Blogs who purchased an average first home last year for $900,000 on a $600,000 mortgage, then a modest 1% increase in mortgage interest rates (see BNZ have gone 6% in their 5 year rate) this year is going to cost an extra $230 a fortnight, and 2% in two years $460. If Joe cant meet this, not only is he/she/family out of their home, but conservatively their $300,000 equity/hard earned savings could well be worth only $200,000 or less.
Try telling them that that is not a catastrophe.
The total household debt that's been accumulated is also at record levels. Interest rates don't even need to move like in 2007/8 for problems to start. The record debt accumulation due to the record low interest rates is going to hurt us for a long time.
In December over $1.3b in additional debt/money was created via mortgages. If that went close to zero (or negative like in the US) there would be a lot of money being sucked out of the economy. It took the US about 7 years to get through the worst of it. We are in an unusual situation in that debt servicing went down to about 10% of income whereas we're sitting at a bit over 8% with record debt.
For the record, I am not talking about affordability - that is terrible.
Nor am I talking about people going bust if interest rates rise.
I am only looking at the housing values. I can't see them dropping dramatically (as would be the case if a bubble pops)
Housing is inherently different from most (if not all) previous "bubbles" It is not purely speculative . Not denying there aren't housing speculators.
Housing is a necessity. 90% of people use it in that manner (be they renters or owners)
There are inherent issues on both the supply and demand side.
- Our population is increasing.
- Usable land is decreasing in availability and increasing in cost.
- Material and labour costs are increasing.
- Intensification is abhorred.
- Infrastructure is lacking the further out you live.
None of the above contributors will simply disappear overnight. At least not without significant legal changes.
I agree, I am not seeing any panic yet though, and the few warning signs that are out there suggest (at least to me) that it will be some isolated pain, but not mass hysteria.
A few FHB on the outskirts of Auckland may suffer, a couple of investors may sell up, but the bulk of people will suck up the rate increases and continue on (albeit with a bit less discretionary spending)
The thing is that though housing is a necessity, in property booms people build oversupplies of housing. And we are having a regional property boom in NZ and Australia.
Usable land is only decreasing in availability in Auckland. Intensification has only become non-viable in Auckland. The problems of Auckland are unique, Auckland makes land as expensive as possible - Auckland costs too much to build on.
In 2018 there will be a surplus of accommodation in Brisbane and Melbourne; at the end of 2022 there will be a surplus of accommodation in Sydney. Currently Hamilton and Tauranga are building about 25 - 40% faster than Auckland. By 2020-2022 all around Auckland there is going to be a great oversupply of houses.
Meanwhile in Auckland there is a planned housing shortage until 2040.
Which means that our population increasing - might not be a thing for much longer. Our people will leave.
It hasn't happened overnight, we have been tracking towards this position for 6+ years.
Noncents you are obviously feeling secure - I guess that have owned your own home for a few years and probably have experienced higher mortgage rates than currently.
However, just as house prices have risen in a flurry they can also fall just as quickly. The drivers over the past eight or nine years or so have been a little different to previous house price rises.
We have often heard for a number of years complaints as to how foreign buyers (which to my knowledge has not been a contributing factor previously in the 40 years I have known the property market) have been fuelling house price rises. When there is no longer the capital gains to be made, they are going to withdraw from the market and are likely to do so in a fairly sudden and quick time period.
Retired mums and dads who have turned to property investment in recent years due to low returns (and news of bad experiences both in the 1987 share market crash and the 2007 finance company crashes) are likely to be looking to term investments as interest rates rises, loss of the advantage of capital gains, and tiring of being landlords by default (and there are many seventy plus people I know who can no longer be bother dealing with errant tenants). Their exit is likely to be less sudden and less quick than foreign investors but is likely to happen and their demand will not be replaced.
So in the main, a continuing buoyant house market would be dependent on a continuing rock-star economy (especially compared to Australia) and high immigration rates - neither of which have been typical in the past and probably not sustainable in the future.
Noncents, you actually dare to ask intelligent questions amongst all the rubbish comments, well done.
To answer your 1st question the biggest drop in house values over the last 30 years (could be much longer but I only have last 30 years data) is a catastrophic...... - 8% in 2008, that drop lasted for 1 year.
Yes agreed that is the case in 2008 and I can't see a big slide soon based on current information and data to this point....
However it may be worth pondering has the AKL RE market ever been so detached from underlying fundamentals before and the possible downside of this?
We've never been in this place before have we?
That is with the house values completely disconnected from any historic rental yields or incomes - there's been no increased GDP per capita or wage rises to organically drive this price increase - its been cheap credit and crazy speculation + overseas buyers fuelling the fire in this fervour....
Conjecture at this point but wont discount anything in the future but markets are unpredictable....
Interesting that anyone's comments that don't agree with your beliefs are "rubbish"...?
Kinda makes the point of entering comments on a discussion board pointless....
Just an opinion.
It is a bit harder to get details going back earlier (e.g 100 years). There is raw data in an available spreadsheet from the RBNZ website from 1962 (see the link on their page), the graph there is from 1990 however.
http://rbnz.govt.nz/statistics/key-graphs/key-graph-house-price-values
The data from 1962 was graphed out on transportblog.co.nz last year which showed a 40% reduction from 1974 -1980 but inflation adjusted.
http://transportblog.co.nz/2016/07/11/remember-the-last-time-house-pric…
Thanks for the links. I am not sure I would count inflation adjusted figures myself. I see that more relating to affordability than house price value. But interesting none the less. A 40% correction would be monumental, but if it took 10 years, I still probably wouldn't see that as a "bubble".
Neville Bennett wrote an eye opening article on previous property collapses some time back:
http://www.interest.co.nz/news/41357/opinion-boom-and-bust-1870s
Falling wool prices after 1891 threatened the financial sector in a way reminiscent of the dairy industry today. Banks had foreclosed on collateral and had vast land holdings. The BNZ was the largest land-holder. In June 1893 it warned the government it would have to close its doors unless it received support. It was "too big to fail", and won support.
You certainly have problems if you are negatively geared in Christchurch and they will get worse as interest rates and other housing costs rise . Those investors who recently bought in the North Shore, Manukau and Waitakere areas could also have future problems if their losses are larger than their capital gains.
Our housing all depends on Australia which by the end of this year will have an oversupply of housing, because they built stuff during this property boom.
Auckland (almost uniquely) decided not to build anything during this property boom, by restricting land supply it has elevated land price returns through the roof and jacked land building costs through the roof (big profits, but big costs).
So what happens next is pretty simple, generation rent leaves Auckland - mostly for Australia. Rents in Aussie are about to reduce significantly, whilst rents in Auckland are going to remain stubbornly high for the next 25 years. There are 35,000 job listings in Melbourne alone and the work is better paid. Most people can do the math.
The best NZ can hope for is that some of generation rent choose to move to Hamilton or Tauranga. Auckland is screwed.
I'm moving back to Aussie next year. I've been back 3 years now and I'm definitely worse off financially, have no chance of buying a house anywhere I wish to live (and has secure employment), nor do I wish to mortgage myself up to the hilt for an over priced dump.
Many people thought I was crazy coming back to NZ and they have been proven right. It just doesn't make any sense staying here and I'm sure there are plenty of people who feel the same as me.
Gordon, being negatively geared on any property is not ideal in any market in my opinion, which is why I don't own any negatively property.
I sleep very well knowing that the Chch market is still very sound and interest rates still below what they were 2 years ago.
Let's not jump the gun with these so-called rises in interest rates.
The truth is that if the rates do continue to rise for the next year or so everyone will feel the heat especially the highly geared owners and tenants.
Good for you The Boy. We all believe everything you say about yourself. I still scratch my head and wonder why someone who thinks he is so smart has all his eggs in one basket. A city at risk of experiencing serious earthquakes, where the rents are dropping and where housing price inflation struggles to beat inflation. As interest rates rise Christchurch house prices might not keep up with inflation. Why not buy some property in Dunedin or in the Otago Lakes area where there is some momentum.
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