Auckland and Canterbury may have the lowest house price inflation in the country while Gisborne could have the highest, according to the Real Estate Institute of New Zealand.
The REINZ has compared the monthly selling prices of residential properties in each region since the beginning of the year, with their corresponding rating valuations, and found some surprising regional variations.
Prices were strongest in Gisborne where on average, selling prices were 70% higher than their corresponding rating valuations, followed by Southland where prices were 43% higher than rating valuations, and Hawke's Bay and Marlborough where prices both had a 27% premium to rating valuations.
Perhaps surprisingly, prices in two of the country's biggest real estate markets, Auckland and Canterbury, had the lowest premiums over their rating valuations. In Auckland, July's selling prices were on average just 5% higher than their corresponding rating valuations, and in Canterbury they were just 6% higher. Auckland and Canterbury were the only regions where selling prices averaged less than a 10% premium on their corresponding rating valuations.
Throughout the entire country, seven regions had selling prices which were between 10% and 20% above rating valuations, and seven had prices that averaged more than 20% above rating valuations (see table below for the full regional breakdown).
The low rate of price growth is particularly surprising for Auckland where the rating valuations were last updated in 2017, suggesting very little capital gain in the region over the last three years. A similar trend is apparent in CoreLogic's House Price Index for August, which measures average property values throughout the country. It showed that average property values in Auckland were 1.2% lower in the three months to the end of August than they were in the three months to the end of May.
The CoreLogic figures also suggested that while prices may be high compared to historical norms in Gisborne, value growth in the region may have peaked. Gisborne's average property values in the three months to August were down by -0.2% compared to three months to May, and down by a more substantial 0.7% compared to the three months to July.
A similar downward trend was evident in Whanganui, which like Gisborne, has some of the lowest property values in the country.
The biggest drop in property values was in Queenstown, where the average value in the three months to August was down -7.4% compared to the three months to May, followed by Dunedin where the quarterly decline if values was -1.3% (see second table below). The figures suggest that while residential property sales are currently buoyant for the time of year, this is not necessarily translating into higher prices in all regions.
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|REINZ Selling Price to Rating Valuation Ratios|
|January - July 2020|
|Bay of Plenty||1.09||1.13||1.12||1.16||1.11||1.12||1.13|
|CoreLogic House Price Index|
|Three months to the end of August 2020|
|Average value *||Monthly change||Quarterly change||Annual change|
|*Rolling three month average|