Property buyers chasing capital gains may find the most promising pickings in smaller towns rather than the big cities.
A new report by property data company CoreLogic identifying the 10 best and 10 worst places for capital value growth over the last 12 months has found that the best performers were mostly in the lower North Island, while the worst performers, which all showed declines in capital values, were mostly in Auckland and Christchurch.
The top 10 places, which had growth in property values of at least 15% in the last 12 months, were Kawarau, Featherston, Clifton (Invercargill), Waitangirua (Porirua), Otamatata (a village near Lake Benmore), Cannons Creek (Porirua), Greytown, Putaruru, Ranui (Porirua), and Martinborough.
The worst 10 places, which all had capital value declines of 3-5% over the last 12 months were Parau (Waitakere), Laingholm (Waitakere), Beckenham (Christchurch), Huia (Waitakere), Schnapper Rock (North Shore), Hei Hei (Christchurch), Islington (Christchurch), Rakaia (near Christchurch), Flat Bush (south Auckland) and Aranui (Christchurch).
"The general picture is of rising residential property values in the North Island, excluding Auckland, over the past year, with softer trends in the South Island," CoreLogic research analyst Kelvin Davidson said.
Affordability was clearly a problem across Auckland and would have affected suburbs such as Flat Bush ands Schnapper Rock.
"The strength in values around the lower North Island in suburbs in Porirua and south Wairarapa has partly reflected first home buyers being pushed out of Wellington City and looking further afield," he said.
Another notable feature was that turnover of properties was higher in places where there was greater capital growth, and lower in areas with low or negative capital growth.
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47 Comments
Not that I share the opinion, but it seems also that it is not possible to state the obvious without receiving a good old fashioned shouting down by those who would insist on their point of view be the only one. Let's short cut this, you tell me what you want me to think and I will tell you that I do.
Point is spinach1, the poster did not "state the obvious", which I assume you perceive had something to do with the high percentage of Maori and Pacifica peoples living in the suburb.
Nope, instead his/her clear intention was to denigrate/slur the residents of the suburb.
Unless your reference was to me stating the obvious, then I agree, yes I did.
The article opens by saying that: "Property buyers chasing capital gains may find the most promising pickings in smaller towns rather than the big cities."
Clearly the suggestion is that based on good "performance" in the past year is likely to carry over into next year.
It is this that is both a fairly glib and dangerous assumption; there is need to look at underlying factors and causes which the article does not do.
Here in the Hawkes' Bay, the past year has seen good capital growth but in the last few months there are signs that - like Wellington over the past year or so - this run may have come to an end. As a property owner, I would love to see this growth continue but underlying factors - such as the price differential to Auckland has closed, and a cooling local and national economy - suggest this is probably not going to happen.
It is far better to analyse and debate the factors which have both caused growth in the past year and in the year ahead - even if we disagree on these - rather than just assuming as the article does, that performance in the past year is an indication for the future.
If the article had simply stuck with saying where price RISES had been in the past twelve months, that has value.
If you earn a good income through employment or generate a profit with a business, the state will punish you with high taxes. They won't do that with property - which is why everyone does it.
Property also doesn't require a sharp mind - which is also why everyone does it. Look it all the property barons here who can't even write sentences properly. With a real business you actually need some acumen.
So you are suggesting to invest in the SM and not buy a home but stay as a renter? Which is the worst suggestion anyone can make. If you invest in SM before buy first home that makes sense. Even economists who promoted the former have now back-tracked and eaten humble pie.
LOL house prices appreciate much faster than inflation, but that is only a fraction of the income you receive from a house, much more important is the rent/savings in addition to the fact that the mortgage depreciates at the rate of inflation, housing is much more profitable that stawks. Notice how many NZ rich listers are heavily invested in property.
skudiv, in 2011, it was you who predicted full blown deflation was imminent. A little early for doom and gloom don't you think? Since then, you obviously bought some property. Are you just another late arrival Johnny whos biased out of reality by his own commitments? - Probably.
Best you refrain advising others to do the same. At this ripe stage of the cycle, odds are stacked your advice will prove dangerous.
I've had a quick look, seems like 8 of the top 10 rich-listers gained their fortunes through business, i.e. shares.
https://www.nbr.co.nz/top-10-richest-3
Have you been looking at a different list?
Using the advantage of leverage to favour property over shares is not logical, you can leverage into any asset class.
Hawkes Bay median home prices fall 30k !!! Hawkes Bay Today newspaper Thursday July 12 says , Covering March to June this year, the report showed Hawkes Bay and Central Otago Lakes bucked the trend of other regions with a MAJOR quarterly fall in median house-price growth - down 7% or $30,000 in Hawkes Bay.
When the Mainstream Lamestream Fake News Media start to talk like this, you know those famous words of John Wheeler are looking closer by the day. 2018 - THE YEAR OF THE CRASH.
Thanks Auckland.. Just took a look at the article which title reads
'From March to June this year, house-price growth fell by 7 per cent in this region..'
I just love how the word 'growth; is still present in the title of the article though.... but when read it is really a 7% fall in median over a three month period or a massive 28% if annualised - I can't see how the word 'growth' even managed to appear.
(addendum - I guess it sounds nicer that 'crashed 7% in 3 months')
For those that are interested in the article
https://www.nzherald.co.nz/hawkes-bay-today/news/article.cfm?c_id=15034…
When prices fall, focus on the positive spin - improving housing affordability ...
'medians are not an exact science' mmmm really, I thought they were exacty in the middle?
'I was at an auction in Hastings Wednesday all but one sold some for more than we expected and others less' have you had a look at how silly that sentence looks.
I think that perhaps you should use this news to help you to re-align the expectations of your vendors.. Good luck, just remember that they don't 'Always go up!' and in a correction only the agents with the best priced (cheapest) stock, make any sales.. it's bread and beans for the majority of them from here on in.
The primary issue with the Massey University home affordability index is that they use median sales price instead of a stratified index. When more lower end homes sell than upper end home sell, then the median price reduces, but the actual affordability may not change at all as the individual house price doesn't change. Looking at the data on the Massey Univ home affordability index, the prior data point appears to have been an outlier on the high side (likely a temporary surge in the high end sales numbers) and the current number has reverted to the recent trend. Note that there are multiple aspects to the home affordability, including median income, interest rates, as well as median home sales price.
I have issues when people use an increasing median price to claim increasing home value when it was in fact just a reduction in lower end home sales. Similarly, I have issues with the claim of decreasing home values when it was a reduction in higher end home sales (which was noted in the HBT article in terms of annual median price cycling due to the change in the composition of sales with season). The high end homes tend to get marketed and sold in the prime summer months, whereas there is more of a consistent turn-over in the more standard homes.
Add: I will note that there was a quarterly fall in HB, and I'll also add that there was a small annual increase in the median house price. Affordability is still worsening in Hawkes Bay, although the Massey affordability appears to be little changed compared the 12 mo, 9 mo, and 6 mo previously. Compared to 3 mo ago, there is a similar positive change as there was a negative change from 6 mo to 3 mo ago.
I would suggest looking at the data from corelogic... the data that is being referenced in this report.
Have a look at: http://www.corelogic.co.nz/news-research/item/nzs-regional-property-mar…
Note that Napier has the highest annual growth in the country, 15.7%, with Hastings at 8.5%. Napiers rate of growth has decreased lately, the corelogic data has prior growth close to 18%.
seeing as we're having this discussion elsewhere already I won't harp on about 'buyers remorse' here.. You're a smart kid so I guess you probably knew that it was buying near the top 2 years ago - did you really stretch yourself and borrow everything the banks would lend to you? Guess we are now seeing the effects of how generous our Australian banking relatives have been.. It's not comfortable is it? You're not one of the 1 in 3 on interest only from 2016 are you? That would be squeaky bum time.
Giggle... Nic, you are kinda funny!
Cash sale, no mortgage, and as I've noted elsewhere I used only a small fraction of available cash to purchase (I miscalculated earlier, it was actually closer to a sixth of available funds to purchase).
The first two years of ownership had your treasured median price increasing by more than 15% per year. My guess is that even with a 10% decline from current numbers I would still be a couple hundred k$ up overall.
Of course, if values decline significantly, I could take advantage and upscale.
Your negative assumptions are amusing and quite incorrect.
add: as to "interest only", there is some truth to that, although in the opposite direction via TD interest.
Nic, as to your "buying near the top" comment, that demonstrates that you have zero knowledge of the property market in Hawkes Bay. The market here was flat for about 7 to 8 years, finally turning up at the end of 2015. In terms market timing, it was a very good time to buy here. Property values may decline by 30%, at which point I would be back to breakeven. I'll take that risk, and if things decline by 50%, then I'll go shopping for an even better home to live in.
Note that I will not buy investment properties, that path has rather ordinary returns compared to other investment types.
Well some of those places listed are horrible so all it tells me is horrible places to live are subject to roller coaster price variations. Recently bailed out of the housing market due to events outside of my control and I can tell you that the gains over the last 15 years were almost unbelievable.
Christchurch market is holding up very well and rents for us are also just fine.
The areas in Chch where they say the average has dropped a tiny bit are in the lower end of the market.
Have heard that a lot of first home buyers have had finance turned down due to Banks lending policy.
This is good for investors as looks like there will be a lot of long term tenants and many more people coming into Chch as it continues to develop.
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