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QV reports NZ house values up 4.6% in last year; Auckland values up 6.3% to fresh record highs; Christchurch values up 5.8% to record highs. Your experience?

Posted in Property Updated
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By Bernard Hickey

House price inflation picked up in July as record low interest rates combined with housing shortages in Christchurch and Auckland to boost prices in those cities by 6% to 9% from a year ago. Prices in some parts of Auckland and Christchurch are rising at an annual rate of 10-15%.

Figures from Quotable Value (QV) showed national house values were 4.6% higher in the three months to July than a year ago, thanks largely to surges to record highs in Christchurch and Auckland where supply shocks in the form of earthquakes and leaky buildings respectively have hit the markets.

The Real Estate Institute of New Zealand (REINZ) reported sales volumes of 5,097 in July, up 19.9% from a year ago, but down from 10,150 in July 2003 when the housing boom was just getting going.

“Buyer interest in Auckland and Christchurch remains the engine of the New Zealand residential real estate market with Auckland maintaining its record median price of NZ$500,000 for the third month in a row and Christchurch hitting its record median price of NZ$335,000 for the third time since November,” said REINZ Chief Executive Helen O’Sullivan.  “In the Auckland real estate market it seems that winter has been cancelled with strong demand right across the city, although the inability of the median price to ‘push on’ indicates that buyers are still cautious about price."

“We are still seeing recovery rather than boom conditions  when we compare the number of transactions in July 2012 with earlier years such as July 2003 when over 10,000 transactions were recorded.  Buyer caution is also evident in the easing of the national median price this month and the slightly slower pace of transactions in July compared with June.” 

QV and REINZ reported Auckland house prices and values were rising at annual rates of 6.3% and 9.3% respectively in July. They said national prices and values rose 4.6% in July from a year ago.

“The relatively strong increase in nationwide values can be attributed primarily to an increase in the main centres, particularly Auckland and Christchurch. There are initial hints in this latest data that values may be levelling in Tauranga and Dunedin after increasing for the past few months, while values in Wellington remain flat,” said Jonno Ingerson, QV.co.nz Research Director.

Here is the full release from QV attached here:

“Across most of the main centres listings remain relatively tight leading to less choice for buyers. In Auckland this has led to a sellers’ market with prices pushing upwards, while Wellington is showing the first signs of heading that way too,” Ingerson said.

“First home buyers are also active, spurred by low mortgage interest rates. This is starting to encourage property investors and small developers back into the market, although investors are now careful to ensure their purchases return a decent yield rather than relying on capital gain. There has also been an increase in activity in the middle to upper range of the market which can possibly be attributed to people coming back into the market after having held off for several years,” he said.

Old Auckland city strong

QV said values in the wider Auckland area are up 6.3% over the past year, with the pace of the increase picking up since April. In the last three months values have increased 3.1%, it said. "Values have increased the most in old Auckland city, up 7.1% over the past year, and up 3.2% over the past three months. North Shore, Waitakere and Manukau aren’t far behind rising 6.2%, 5.9% and 6.0% over the past year respectively."

Figures from Barfoot and Thompson for July showed prices in central Auckland suburbs, Eastern Suburbs and South Auckland rose in July between 17.5% and 26% from a year ago.

"In the past three months North Shore values have increased by 3.5%, while Waitakere and Manukau are both up 2.8% in that time. Values in the wider Auckland area are now 5.6% above the 2007 market peak, with the old Auckland City leading the way at 8.4% above. When inflation is taken into account old Auckland city values remain 5.2% below the peak although at the current rate of increase will soon be above the previous peak in inflation adjusted terms also."

QV Valuer Jan O’Donohue said Auckland continued to be a sellers’ market with limited listings in most areas. The market has changed in the North Shore over the past couple of months with buyers now acting with more confidence and a sense of almost certainty that the market was heading upwards, she said.

"This is leading to increased competition and prices are edging up accordingly. Prices are also rising south of the Harbour Bridge with Avondale, Blockhouse Bay, Mt Roskill, Pakuranga and Howick popular. Many vendors are also opting to sell by auction, with the auction dates being brought forward when interest is high," she said.

“Property investors and small developers are coming back into the market to the point whereby first home buyers are struggling to match them and second home buyers with equity. More investors are continuing to add to their portfolio in the west, where values continue to be steady.”

Waimakariri, Selwyn up 13-14%

QV said values in Christchurch have risen 5.8% over the past year and 2.1% over the past three months to now sit 1.9% above the previous market peak of late 2007. The Waimakariri and Selwyn Districts continue to increase in value faster than anywhere else in the country, with both now well above the previous market peak. Waimakariri is up 13.9% over the past year and 13.0% above the 2007 peak, while Selwyn is up 13.0% over the past year and is 12.9% above peak. QV Valuer Daryl Taggart said “having come a long way over the past year, Christchurch experienced another vibrant month in July.

QV said values in most of the provincial centres have been relatively stable for the past year, with values lying within a 1.5% band. The exceptions are Napier (down 1.7%), Palmerston North (up 2.2%) and Nelson (up 1.9%) although all three have flattened in recent months. Gisborne has dropped 4.2% over the past year and is now more than 25% below peak.

REINZ said the national median house price fell by NZ$11,000 to NZ$361,000, after reaching a new record high of NZ$372,000 in June. It was up 4.6% from July last year. The Auckland median was a record high NZ$500,000 record median for the third month in a row. 

It said almost all regions recorded increases in sales volume compared to July last year, with Taranaki recording an increase of 62.7%, followed by Auckland with 28.2% and Manawatu/Wanganui with 23.6%.  Only Southland recorded a fall in sales volume (-5.0%) compared to July last year. 

The REINZ Stratified House Price Index, which adjusts for some of the variations in mix that can impact on the median price, is 5.2% higher than July 2011 and is now just below the record high set in June.  The House Price Indices for Auckland and Christchurch have set new record highs in July. Compared to July 2011 the REINZ Housing Price Index rose 5.2%, Auckland rose 9.3% and Christchurch 6.6%.

Across New Zealand the total value of residential sales, including sections was NZ$2.62 billion in July, compared to NZ$2.81 billion in June, and NZ$2.08 billion in July 2011.  For the 12 months ended July 2012 the total value of residential sales was NZ$30.64 billion.

The REINZ Housing Price Index eased 0.7% in July compared with June to sit at 3,377.1.  The REINZ Housing Price Index also once again recorded new record highs in Auckland and Christchurch.  Other North Island and Sections were the only two to record falls in July. 

See the full REINZ market statistics here.

(Updated with REINZ detail, comments, video)

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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59 Comments

Lifetime renting now seems

Lifetime renting now seems very appealing for this Auckland based first home buyer.

You are not on your

The price is still 5.2% below

The price is still 5.2% below 2007 inflation adjusted in Auckland.

My mortgage isn't inflation

My mortgage isn't inflation adjusted.

Good job I bought in the lows

Good job I bought in the lows of 2008-2010 then ;)

what confuses me is that with

what confuses me is that with Unemployment still high, how can people justify high house prices!!!

Maybe it's the 93.2% who

Maybe it's the 93.2% who aren't unemployed.

Individual employment

Individual employment stability is what counts not the overall level of unemployment. If you've held your job for the last four years you can probably assume you are safe enough to borrow. 
Also, we shouldn't assume that buyers are either borrowers or salary earners e.g. our new neighbours in the Eastern Suburbs are Taiwanese and not actually in the Country. The $1,000,000 they paid was almost certainly not borrowed, at least not in New Zealand.
That said, we've just had the agents through for our other house in the area, as we are sick of being landlords. The price estimates, even taken with a grain of salt, are very attractive. If the house is bought by an offshore person, it will likely be an injection of external money, and likely the removal of a rental property.
Nothing could convince me to sell the family house, no matter what proces are bandied about. I could not guarantee being able to get back in.
 
 

People: "Please Mr Auckland

People: "Please Mr Auckland Council are we allowed to build affordable housing yet?"
 
Mr Auckland Council: "No"

Maybe.  However if an entry

Maybe.  However if an entry level dwelling costs X banning foriegners from buying it won't make it cost less than X.  That's a Plan issue.  maybe Plans and foreign investment rules both need changing.
 
I don't think much of Hugh's ideas.  Suburban sprawl with it's increased pollution and infrastructure (which he thinks should be funded by Council debt to make the houses appear cheaper) is very short sighted and more expensive in the long run.

The CBD PM2 of 2006 said no 2

The CBD PM2 of 2006 said no 2 bed apartment under $490K is allowed to be built.  Therefore not one has been built since - as existing ones are cheaper so why would a developer build something they'll take a loss on?  7 years later prices of existing units have almost risen to the point it is feasible to build again.
 
This is not because of foreigners buying stuff.  It is because things don't get built when building them will lead to a certain loss.  If your first paragraph had any basis in reality the construction industry wouldn't have been so quiet for the last 6 years.
 
I'm off to the launch of the new CBD masterplan.

Bob I agree that PM2 didn't

Bob
I agree that PM2 didn't help in many respects, but apartment development was starting to fade somewhat anyway before it came through. It was probably a combination of PM2, an oversupply of apartments, significantly rising construction costs, limits largely reached with regard to international student numbers and difficulty to obtain finance that killed the market.
how was the launch? 

Bob I agree that PM2 didn't

Bob
I agree that PM2 didn't help in many respects, but apartment development was starting to fade somewhat anyway before it came through. It was probably a combination of PM2, an oversupply of apartments, significantly rising construction costs, limits largely reached with regard to international student numbers and difficulty to obtain finance that killed the market.
how was the launch? 

Hey mist ...delete the first

Hey mist ...delete the first of the double posts quicko smarto....! don't leave Bob in the dark there. 

Strange.....the very people

Strange.....the very people crying out loud that economics is not allowed to work is also stopping economics from working ...all in the name of  evil "Suburban Sprawl" and "Pollution".
 
New Zealand has one of the  lowest population density in the world and we complain that "sprawl" is causing infrastrature pollution.....
 
The fact that house prices is artificially held high by restricted land zoning and semi cartelised supply of housing materials don't seem to be recognised as "economic" realities.
 
This is the reason house prices are rising in Auckland and Christchurch......in a world going (or already) into a massive recession. Not some annoynmous Asian foreign immgrant (rich or otherwise)
 
 

Ever heard of "lowest

Ever heard of "lowest mortgage interest rate in New Zealand" ?
Ever heard of "highest profit  for Banks in New Zealand" ?
Ever heard of "shortage due to council and planning delays"?
Ever heard of "excessive cost of council and planning approvals" ? 
The idea that every Asian Immigrant is coming with suitcases of cash is myth .
 
If Asians want to invest in properties for returns (or just plain good old capital gains) New Zealand is definitely not the place....it's in Asia. China/HongKong/Singapore has the highest growth rate for property prices !!

What you are taling about

What you are taling about isnt "economics" but political mantra or at best a specific school of economics.  If you are going to try and consider real economics and not voodoo then you have to look at the various factors and their impact.
The biggest reason for Chch is the artificial scarcity caused by the earthquake.  In which case considering any data from this effect needs to be quantified and ignored/removed. Then we need to look at Auckland, how many chinese do we have hiding cash? how many ex-PIs from chch are there? ex-chch residents moving from the disaster? 
Some of the killer reasons that it isnt planning permission but speculation are the examples of Spain and Ireland. They built like mad and got very expensive, many properties are now empty and will never be occupied...and indeed tehir Govns and us the tax payer have had to bail them out....
regards
 

1. I think everybody except

1. I think everybody except you has agreed that cheap financing and excessive credit growth  is the cause of the property bubble in Ireland/Spain etc etc. If we need to go over this again ??
2. The scarcity in Christchurch caused by the earthquake can be easily resolved if the Chch council and Goverment just increase and rezone other parts of Canterbury into housing. The reason they refuse to do so is because they want rebuilding in the original Chch area. Thereby causing restriction in the rebuilding. The fact that the insurance business is bankrupt and unable to pay for the rebuilding is another factor. Almost everybody affected depends on Insurance for their rebuilding.....no insurance payment, no rebuilding.
3. a substantial portion of buyers in Auckland comes from Chch, fed up with the delays in their own rebuilding. This is the reason why prices in Auckland rose so quickly.
4. Why "Chinese hiding cash?"...what is this idea based on ?? Has IRD or anybody actually found "hidden cash" by Chinese Immigrants ? On the contrary I know of quite a few "Chinese " who are using their "cash" to built houses for sale in Auckland....( thereby increasing housing supply) and I also happen to know a few "Chinese" who has lost money in the last property crash in 2007/08....( I doubt any NZers will thank them or their "free gift" )
 

   Auckland values up 6.3%

 

 Auckland values up 6.3% to fresh record highs; 
what a coincidence, so are my rates, just as well QV's got me covered....!

Crazy stuff...why would you

Crazy stuff...why would you buy in this market....our economy is being propped up by record Govt borrowing, and economic growth is still flatlining....when Govt stimulus goes and Auckland rezoning takes place, owning overvalued property will be painful.

do you know when the rezoning

do you know when the rezoning is taking place?

When will rezoning take

When will rezoning take place? Don't know exactly...but they're are working on it:
http://www.aucklandcouncil.govt.nz/EN/planspoliciesprojects/plansstrategies/DistrictRegionalPlans/pages/unitaryplan.aspx
It's safe to say that when Govt stimulus slows down...circa 2015...there will also be good progress with re-zoning.

Plan to be notified next

Plan to be notified next year.  However once it's notified there will be a process of submissions and hearings and appeals and environment court rulings that will last for many years as the NIMBYs fight to keep everything exactly as it is now.
 
Council will no doubt tie upzoning to a very subjective, intangible and expensive set of 'criteria' to protect people from living in conditions they consider substandard (like anything under $600K).

"protect people from living

"protect people from living in conditions they consider substandard"
hahaha, i like that.... 60% of houses in nz are sub-standard at the moment.... people just dont have the money to maintain them.. :)

It is funny how there is so

It is funny how there is so much moaning about how expensive houses are and then if they are cheaper there's moaning about how they are not high enough quality and if the quality is improved they are more expensive and then there is moaning about how expensive they are, but if they are made cheaper...
 
All people want is nice, big high quality houses in good areas for really low prices - is that too much to ask for?

Yes....big = more $s....and

Yes....big = more $s....and who really needs big?  My house is about 130sqm, suits us fine.
 
regards

Bob...agreed...there will be

Bob...agreed...there will be robust discussion when Unitary Plan is notified....however it is a key plank in making housing affordable...Govt won't let it drag on too long...otherwise at next election they will have a major issue that other parties will capitalise on.

BH, why not balance the

BH, why not balance the repeating/reporting with a Median Multiple?
 
Because as not a few common taters have noted, incomes are not a'goin' up - shall we say, commensurately.
 
So, do we rilly, rilly need an LVR brought in (won't help a cash sale, though....)?
 

Check Interest.co.nz

Check Interest.co.nz borrowing charts - house prices have gone up while borrowing has gone down.  An LVR limit won't reduce house prices, just like increasing taxes didn't reduce house prices.

.... and like increasing

.... and like increasing living costs don't affect house prices, and like wages losing ground against inflation doesn't affect house prices.... nothing affects house prices, they can only go up, uP UP!
 
Why would borrowing go down when the cost of borrowing is so cheap?
 
Keep pumping that bubble bigger boys and girls.

Look to Texas for one, yes an

Look to Texas for one, yes an LVR will limit. Steve Keen also points out the leveraging that runs up the tree...so 8k at the bottom of the market flows on up as leverage can be increased at all levels.  The fact that you tell me that borrowing has gone down, while prices have risen tells me there is very probably more cash buying, I guess thast the Chinese. The Q is from that difference can we determine roughly what the % of cash buyer is or the change.....someone with fancy maths might be able to make a stab at that.   
Once we have that then we can figure out the impact of that % up and leaving NZ....if its say 10% that would be a huge impact.
What tax increases? and who said they'd reduce prices? National dropped the top tax rate for those high earners, there is more cash and hence moe leverage right there....increasing prices...
regards
 
 
 

Yes we need a LVR, but really

Yes we need a LVR, but really we needed it a decade ago....before the craziness....
regards

REINZ Real estate sales data

REINZ Real estate sales data for July just released - The national median house price is up 4.6% compared to July last year, with Auckland maintaining the $500,000 record median for the third month in a row. 

Is that inflation corrected? 

Is that inflation corrected?  if you take my fav measure, core inflation at 1.5% off that we see 3%.....and is that Nationwide or just chch and auck pulling the otherwise losing areas up?
If you take others love of CPI....pretty much zero gain....
regards

  “Buyer interest in

 

“Buyer interest in Auckland and Christchurch remains the engine of the New Zealand residential real estate market with Auckland maintaining its record median price of $500,000 for the third month in a row and Christchurch hitting its record median price of $335,000 for the third time since November,” said REINZ Chief Executive Helen O’Sullivan. “In the Auckland real estate market it seems that winter has been cancelled with strong demand right across the city, although the inability of the median price to ‘push on’ indicates that buyers are still cautious about price. 

 

4.6 % So after paying the

4.6 %
So after paying the realestate agent to sell it, plus the lawyers etc.
What's left? 
Not even factoring in that you have to pay that all over again if you want to buy another house. Sounds like a big waste of time.
 
Mind you, the REINZ seems to think it's great.
What buisiness are thier members in again?

Once the market turns,as

Once the market turns,as surely it will, just watch that hot money from Asia head for the exit.
One thing for certain is that that type of owner will sell at whatever price that they can get.
When is the question, not if.

What the Real estate and QV

What the Real estate and QV dont tell us about
Have a look on trademe.. how many of thehouses on the market.. have no tentents, and obviously just been refurnised...20 to 40K spent on them?
Then go back and find out how many of the sales are resales in the last 1 to 6 months?
6 months ago was about 15 to 18% in the areas we monitor, last couple months its now getting upto 30%...
And the resale is around the $25K to $112K  increase in price.
It is also noticable that the 1st sale price is approx the same as 5 yrs ago.
So how much of this so called "house values up.." is where 30% of the sales are simply 'added value, do up , maintance'  stuff and flicked off......and THEN readjust for inflation.
What ever is left will be supply /demand influnces on the market.

Good point....I'd have

Good point....I'd have assumed it was like with like....but given its real estate who knows what smoke and mirrors. there are.
regards

With a market..what ever the

With a market..what ever the market..in sort supply, it makes sence to pick up houses in need of a do over, cheap, spend 3 to6 weeks doing so before the bank knocks the interest rate up....carpets, paint, new kitchen new bathroom...
Then get it re valued, lend agaist the new value, pick the next house up, and put the 1st back on the market... a market in sort supply and a very attactive above ave to boot...easy sell.
If doesnt sell to quick, rent it out at a premuim...again a market in short supply of good rentals...and leave on the market...in the mean time the 2nd house is back on the market.
Turn over 1 house a month, ave 50K gross, spend ave 30K each...thats conservatly a 100K per year....for organising a few plasters and painters.
Turning over that many houses one doesnt pay full real estate fees and get those bargins even before the 1st advert is hung in the window.
Steps

Counterfactual spin.   After

Counterfactual spin.
 
After reviewing the REINZ's stratified data it seems decile 10 properties (the higher priced end of the market and predominantly in Auckland) are suffering from falling sales prices and volumes.
 
Latest median sale July price: $721,000.00  (-$19,000.00 from June)
 
Latest total July sales value: $582,263,475.00  (-$76,814,675.00 from June)
 
Total number of July sales: 695 (-57 from June)
 
Given the overwhelming impact of sales value for stratified decile 10 properties there little to comprehend as to why the old national median house price fell to $361,000.00 for July from $372,000.00 in June.
 
Thank you Colin Riden for the data.
 

"The focus should be on where

"The focus should be on where the country is heading and what can be done to make nz a great country once again."
 
Yep , sounds good on the surface....now start to think this thru a little...
Shortage of houses, so we go to work each day, from our tin garage behind, thats on the back of a rented property ineffect sub leased....to be able to pay for the inflated rents.
Eventually it ends up a work force leaving their corrogated iron slums in their nice suits and latest merc
What comes 1st, homes for the workers or workers for for the jobs?
Bit of what comes 1st the chicken or the egg...

Since you want to think thru

Since you want to think thru things, think thru less energy every year from now on, in the order of 4 to 8% less per annum...do let me know how you do.
One thing apart from that is, no one has yet successfully explained why before 2007 we had such high prices and a "shortage" of housing in say ireland and Spain and after 2007 we had bankrupt nations and un-occupied and never to be occupied accomodation, ie a surplus.
Also the current over-supply in china is so large that if they stopped building houses today they have enough already built until 2030., yet they to have huge speculation, price rises, over-building and hype.  Oh and they look to collapse, big time....
and ppl like Hugh P want to do the same here.....cretin jumps to mind in his case.
regards

I did, 10yrs or so ago...and

I did, 10yrs or so ago...and I would prefer not to expolate too much...rather depressing outlook on future generations.....exponentually
Yes read your posts and they have substance

@ steven. Market-wide

@ steven. Market-wide collective mania driven by greed, which sooner or later is trumped by fear, is really the only explanation. Sentiment in other words. 
 
I watched everybody here in USA go totally nuts about wars and real estate from '01 thru '07. It's the collective thing which provides its power, either up or down, kind of like a tug of war, where whoever has the weight will pull the rope until the other side is in the drink.
 
Once the sentiment changed RE became like radio-active waste, and nothing could arrest the downside momentum. The whole culture of the USA was affected given everybody has to live somewhere, either via rent or ownership
 
AKL is demonstrating this collective thing right now and IMHO is its primary self-fulfilling upside price driver. One thing is for sure; It really is getting interesting.

The statistics for gold v

The statistics for gold v house prices are in for July, 2012. See the graphs here.

As placed against gold ounces, house prices are decreasing again in value. For Auckland house prices, it takes about 2 ozs of gold less to buy a house in July compared to June. A 7 oz drop for NZ overall. Compare that to what is stated on websites like interest.co.nz and the NZ Herald. They would make you think prices are rampant. Hmm.

This place is in a block of 8

This place is in a block of 8 in Auckland's "hot" suburb of Onehunga.
They are all very similar and three years ago one went for $290,000. two years ago one went for $345,000 and this year one went for $430,000. This one is likely to go for late $400s and it's considered a bargain as there is nothing else in the area that is standalone for near that price.
http://www.trademe.co.nz/property/residential/for-sale/auction-504015312.htm
At this end of the market in suburbs like this demand is outstrippping supply massively.
 
 

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