RBNZ and government clamp down on residential property investors & offshore buyers starting to bite in Auckland as housing values flatten with other regions still rising

RBNZ and government clamp down on residential property investors & offshore buyers starting to bite in Auckland as housing values flatten with other regions still rising

Housing values were largely flat in Central Auckland, Waitakere and Manukau in December but continued rising in other parts of Auckland and elsewhere in the country, according to the latest figures from Quotable Value (QV).

According to QV, the average value of homes in Central Auckland (the area within the boundaries of the former Auckland City Council prior to the Super City amalgamation) was $1,095,838 in December, barely changed from November's average of $1,095,480. Nonetheless this was up 20.7% on December 2014 (see the chart below for average values in all districts of NZ).

Similarly, the average residential property value in Manukau was $796,027 in December, down slightly from November's average of $796,950, but up 26.3% compared to December 2014. The average value of homes in Waitakere increased slightly from $747,664 in November to $748,011 in December, which was up 25.6% for the year.

The North Shore posted modest increases in December, with an average value of $1,089,745 compared to $1,088,059 in November but December's figure was still up 22% for the year.

The biggest rises in housing values in December were on Auckland's northern and southern flanks, with average values continuing to rise strongly in Rodney, Papakura and Franklin.

The average value of all homes in the Auckland region rose from $931,807 in November to $933,264 in December, up 22.5% compared with December 2014.

The biggest value increases in Auckland during the year were in south Auckland, with average values in Papakura up +29.9% in December compared to a year earlier, followed by Manukau Central +29.3% and north west Manukau +28% (refer chart below).

Changes starting to bite

However the figures also suggest the rate of growth in property values in Auckland is slowing.

In November last year the average value of Auckland homes was up 24.4% compared to a year earlier, but in December that had fallen back to 22.5%.

In Waitakere the annual increase in average values dropped from 28.4% in November to 25.6% in December, on the North Shore it dropped form 24.1% to 22%, and in Central Auckland it dropped from 22.8% to 20.7%.

QV national spokesperson Andrea Rush said tougher LVR restrictions for Auckland property investors and new tax rules for property buyers who sell houses within two years had slowed the Auckland market towards the end of last year. Foreign buyers also now have to register with the IRD and have a New Zealand bank account. (A clamp down by the Chinese government on money flowing out of China has also been cited as helping slow the Auckland housing market).

"Following the introduction of the new measures in October and November, the rate of growth in the Auckland market slowed, while values in many other centres including Wellington and Dunedin saw significant value increases," Rush said.

It is also likely that the full effects of the changes are not yet showing up in QV's figures because it can take two or three months or even longer from the time a sale price is agreed for it to flow through to QV's valuation updates.

Strong growth in Tauranga & Hamilton

In most parts of the country outside of Auckland, December's average values continued to rise compared to November and December 2014.

There were particularly strong rises in Hamilton where December's average of $444,211 was up 19.5% on a year earlier and in Tauranga where December's average of $541,881 was up 18.2% for the year.

But growth in values was much more subdued around the rest of the country, with the annual increase in average values in all districts south of the upper North Island (except Queenstown Lakes and the MacKenzie country) confined to single digits.

In Wellington the average value of homes was $569,370 in December, up 5.2% compared to a year earlier and in Christchurch the average value was $482,043 in December, up just 2.6% for the year.

In Dunedin the average value was $308,944 in December, up 5.7% for the year and in Queenstown-Lakes it was $776,671, up 12.1%.

QV Average Residential Property Values $

Area Dec-14 Nov-15 Dec-15 Annual Change
Auckland Region 761,858       931,807 933,264 22.5%
Wellington Region 453,366       468,902 476,634 5.1%
Main Urban Areas 575,053       667,220 669,091 16.4%
Total NZ 488,674       555,729 558,146 14.2%
Far North 308,125       328,038 328,687 6.7%
Whangarei 337,190       373,559 380,592 12.9%
Kaipara 339,643       357,569 365,763 7.7%
Auckland - Rodney 686,579       801,398 815,353 18.8%
Rodney - Hibiscus Coast 681,661       789,822 804,163 18.0%
Rodney - North 692,586       814,954  828,212 19.6%
Auckland - North Shore 893,263 1,088,059 1,089,745 22.0%
North Shore - Coastal 1,016,669 1,244,613 1,244,765 22.4%
North Shore - Onewa 727,282 877,753  878,235 20.8%
North Shore - North Harbour 860,260 1,048,381   1,053,882 22.5%
Waitakere 595,498 747,664 748,011 25.6%
Auckland - City 907,819 1,095,480 1,095,838 20.7%
Auckland City - Central 789,752       951,386 950,815 20.4%
Auckland_City - East 1,137,909 1,367,684 1,373,235 20.7%
Auckland City - South 819,352       994,392 991,153 21.0%
Auckland City - Islands 767,788       900,946 906,239 18.0%
Auckland - Manukau 630,167       796,950 796,027 26.3%
Manukau - East 825,278  1,019,388 1,021,890 23.8%
Manukau - Central 479,063       622,567  619,257 29.3%
Manukau - North West 529,243       676,901 677,480 28.0%
Auckland - Papakura 463,342       595,557 601,717 29.9%
Auckland - Franklin 483,529       575,259 580,110 20.0%
Thames Coromandel 507,093       544,861 546,926 7.9%
Hauraki 238,356       262,553 271,721 14.0%
Waikato 287,059       330,568 344,298 19.9%
Matamata Piako 278,741       303,531 308,130 10.5%
Hamilton 371,819       435,848 444,211 19.5%
Hamilton - North East 468,100       554,583 561,436 19.9%
Hamilton - Central & North West 344,506       406,515 416,497 20.9%
Hamilton - South East 342,030       396,811 406,574 18.9%
Hamilton - South West 328,673       383,684 392,860 19.5%
Waipa 347,999       381,310 389,792 12.0%
Otorohanga 182,165  N/A  226,071 24.1%
South Waikato 130,477       144,039 139,451 6.9%
Waitomo 136,179       145,655 147,515 8.3%
Taupo 337,511       356,724 362,444 7.4%
Western BOP 423,562       452,944 464,732 9.7%
Tauranga 458,521       525,758 541,881 18.2%
Rotorua 269,876       291,963 295,082 9.3%
Whakatane 302,299       307,205 310,290 2.6%
Kawerau 103,391       103,741 110,062 6.5%
Opotiki 197,082  N/A  215,732 9.5%
Gisborne 225,617       232,128 230,662 2.2%
Wairoa 147,069       145,867 148,126 0.7%
Hastings 297,673       317,612 322,613 8.4%
Napier 328,251       338,960 343,843 4.8%
Central Hawkes Bay 201,592       213,234 219,067 8.7%
New Plymouth 357,617       373,450 372,385 4.1%
Stratford 201,493       213,471 209,578 4.0%
South Taranaki 185,794       188,755 188,235 1.3%
Ruapehu 138,465       131,274 133,390 -3.7%
Whanganui 182,365       184,696 189,161 3.7%
Rangitikei 142,772       144,644 146,693 2.7%
Manawatu 242,304       252,439 253,559 4.6%
Palmerston North 289,439       298,847 301,466 4.2%
Tararua 150,712       150,797 154,386 2.4%
Horowhenua 203,725       210,957 213,309 4.7%
Kapiti Coast 377,868       388,890 390,917 3.5%
Porirua 379,342       391,273 397,607 4.8%
Upper Hutt 334,652       344,625 347,249 3.8%
Hutt 369,261       383,531 388,177 5.1%
Wellington 541,093       558,211 569,370 5.2%
Wellington - Central & South 552,105       564,985 573,201 3.8%
Wellington - East 592,682       608,460 624,730 5.4%
Wellington - North 471,642       489,284 499,707 6.0%
Wellington - West 614,826       643,393 657,850 7.0%
Masterton 236,537       241,442 243,648 3.0%
Carterton 260,467       260,614 265,700 2.0%
South Wairarapa 298,231       311,263 316,877 6.3%
Tasman 414,947       434,123 436,255 5.1%
Nelson 410,363       424,022 428,608 4.4%
Marlborough 346,589       362,991 366,057 5.6%
Kaikoura 343,478  N/A  369,868 7.7%
Buller 202,019       191,377 189,415 -6.2%
Grey 224,530       212,192 202,218 -9.9%
Westland 227,620       229,912 231,455 1.7%
Hurunui 346,738       358,486 356,101 2.7%
Waimakariri 414,248       417,122 417,036 0.7%
Christchurch 469,742       480,464 482,043 2.6%
Christchurch - East 351,189       364,385 366,011 4.2%
Christchurch - Hills 626,857       649,558 653,696 4.3%
Christchurch - Central & North 551,899       565,568 567,476 2.8%
Christchurch - Southwest 449,896       455,177 455,464 1.2%
Christchurch - Banks Peninsula 486,868       487,377 489,905 0.6%
Selwyn 510,418       522,414 524,346 2.7%
Ashburton 328,349       338,255 341,748 4.1%
Timaru 289,474       312,663 314,046 8.5%
MacKenzie 291,749       330,962 328,640 12.6%
Waimate 200,937       210,944 215,195 7.1%
Waitaki 221,790       230,138 232,366 4.8%
Central Otago 318,988       337,421 344,080 7.9%
Queenstown Lakes 693,045       756,665 776,671 12.1%
Dunedin 292,220       306,614 308,944 5.7%
Dunedin - Central & North 300,925       323,425 324,600 7.9%
Dunedin - Peninsular & Coastal 270,935       280,648 277,251 2.3%
Dunedin - South 278,627       287,399 291,984 4.8%
Dunedin - Taieri 304,430       316,037 319,020 4.8%
Clutha 165,335       167,203 163,669 -1.0%
Southland 205,423       212,662 212,616 3.5%
Gore 184,210       184,396 183,917 -0.2%
Invercargill 204,705       214,880 215,327 5.2%

QV house price index

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Is it the effect of Government legislation or is it the Jafa malaise spreading out of Jafaville to the regions? As percentage returns reduce in AK, any investor would be looking to go where they are better. I think this would have happened without the Governments input IMHO.

Regional city property values needs a lot of catch up, as prices have been flatlining since 2009.

thats because wage growth in the regions is also flat and more of the houses are owner occupied so people are more cautous as to what they can afford.
as so as the investors head there watch the prices shot up

Regional cities don't have 1000s of 'ghost' empty houses owned by offshore 'investors' or laundry-persons (yet). But they are starting to attract retirees from Auckland - economic migrants.

...though in my travels I note quite a few empties popping up around Hamilton - though some appear to have the little old person baracaded inside (culturally shy?) - windows shut tight, curtains drawn..the odd glimpse of a shadow if you happen to be going past at the right time. No doubt 'minding' the foreign investment for yonder investor.

What a shambles John Key has let develop in our housing market. What a hopeless disgrace of a PM he is.

My father settled in November, I reckon his timing might be pretty good to catch the peak in Auckland. But then he has inflated the prices in one district by buying there. Mind you, he kept the majority in cash so he can spend it on travel ie: not spend it in New Zealand.

To answer the rhetorical question with a question ............. Who cares ?

Unless you are and Aucklander realising the "profit" in an investment property , emigrating from NZ , or retiring to the wop-wops , the whole excersize is academic , if you sell you have to buy again in the same over-inflated market (or rent) so its pretty much a zero sum gain for most of us

except with the rise in prices also brings about a rise in expenses for owning the house, sorry i would rather have a cheaper house and more money to spend than have my house going up and rates, insurance etc following suit

Rates don't go up because house prices go up, they go up because we have a far left mayor who can't tell the difference between 3% and 9.9% . Your rates will go up by more than someone else's if your property value rises by more than theirs and you are both in the same region because the total increase for the region is decided beforehand and then allocated across households.

wrong check again rates are calculated on the value of your property it detemines which band you fall into and they havent moved the bands much so if your property goes from 500k to 750 k you now pay 2350 instead of 1733 or even worse if you house goes above a Mil now 2967 , an extra 1200 on five years ago
Rates for 2015/2016 will be calculated using property values from the November 2014 revaluation. In the three years since we last set the rates, residential properties in Auckland increased in value by an average of approximately 34per cent. The new property values will have no impact on the total amount of rates collected by council. Property values simply help to determine how rates are shared across ratepayers

http://www.aucklandcouncil.govt.nz/en/ratesbuildingproperty/ratesvaluati...

not quite, sharetrader.

Unlike central government councils work backwards. First they calculate what their budget will be then they work out how much of that has to be raised through rates. Once they have done that they use property values purely as a way of divvying up the rates burden and introducing a little progressivity into it.

As property values go up the multipliers a council uses go down. I know it is hard to believe but rates in Auckland have not gone up by 50% in the last few years even though property values have.

So you are right in the end that the total rates take doesn't change just because property values move. But the only time your rates go up automatically because of a change in value is when that change is relative to other properties. When all properties go up nothing changes in rates (not automatically anyway).

all i know is i am now in the higher band so am paying more a lot more, and all because of crazy Prices increases in my area, in fact our area had one of the highest increases in the last rates round due to it.
and so by saying your house price does not affect what you will pay is wrong
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11471241

" crazy Prices increases in my area" - that's probably your answer. It is the relative increase in values in your area compared to other areas that is more likely to blame.

It is sometimes hard to tell because, for many reasons, councils have tended over the last 15 years to increase rates by more than CPI. So people like you get a double whammy. And it sounds like it's biting pretty hard.

crazy Prices increases in my area"
this house is not even on the good side, you look over mangroves at industrial area with massive power lines running overhead and the street is only one of three in the middle of mangere bridge industrial estate.
the problem is this type of sale pushes up the values around it and this is only one example there was plenty of this going on last couple of years mostly investors, good on the locals that took the money and ran but for those of us that stayed we ended up with a 16.9% increase in cost to carry on living there
http://www.stuff.co.nz/life-style/home-property/68598011/auckland-house-...

And it sounds like it's biting pretty hard.
its not that i just hate passing my money over to any government department or council to spend as having worked for them out of school years ago i know how inefficent they are and how many nobbies work for them that cant get a real job

Should not moan about rates when you have had massive tax free capital gains; some people should get out more often rather than sitting worrying about how much their house is worth now, Oh dear I've made 500K, now my rates will go up!! Spare us all(particularly non property owners)...

Rates are determined on what the council wants as an income. value bands etc just determine how much you pay.

I am also not sure on the 3 years either, ie some councils are doing it more frequently in order to pick up extra $s?

thats the point its called income creep they do it with taxes too, if you only adjust the bands by rate of CPI you can capture a bigger proportion moving up a band and paying more, and who in their right mind wants to hand over more money to a government or council. it just encourages politicians to think of ways of leaving a legacy about themselves

No it's a legal thing. The revaluations are supposed to happen at least every three years. Ratepayers pick up the tab so it's unlikely to be done any more frequently.

Seriously, property values up or property values down makes no difference at all to total rates take.

This is the mechanism they use:

- they have a big spreadsheet with every current rateable property and its value in it
- the accountant gets told at a budget (=Ten Year Plan/Annual Plan) meeting what the target for rates collection is
- the accountant iteratively adjusts the multiplier (i.e. a percentage of a property's value) until the number at the bottom is the one they want

If all houses double in value overnight councils simply halve the multiplier (all other things being equal).

Yes, it doesn't matter if you are already a home owner without having to borrow more or use additional equity to buy something else (and that might be most of us...currently) but the reality is that plenty of people have geared up to chase this thing or allocated their savings into a non productive and illiquid asset. So on one level yes, maybe you personally are not directly affected but on another level, we may all pay the price for overinflated property markets and the inadequate savings and high debt levels that they cause.

Where are all the Awklund property spruikers now ??? ...C'mon I was relying on your ilk to push the median price to $1 mill !! ..... oh well, it was fun while it lasted.

Cue the "maximum immigration, "shortage" of houses, lowest interests rates ever and "best" place to
live brigade" to chime in and say "this property party never ends" because it's MY party ...... it is all based on "fear and greed" - be greedy when others are fearful and fearful when others are greedy - Warren Buffet

Crazy Horse - as soon as the 12,000 foreign investors get their IRD number processed (bit of a backlog at IRD at the moment) then they will start buying again. I predict that the $1m will be reached in the Feb/Mar/Apr period - it has to happen - net migration at record levels, interest rates at record lows, housing inventory low, not enough being built and not enough tradespeople available to build enough to keep up with demand (20,000 shortfall in 2015 alone) etc etc. Just watch this space - the $1m is on it's way!

You must be talking average price rather than median?

Good evening bigblue ....I am hoping that the Chinese et al get back into the Auckland market at "full tilt" .......so l can sell !!

Take the money and run !!

As it happens, property concerns come into a tape leaked to me. I’ll transcribe it all, so nothing is out of context:

‘Hello, is this the secret number?’

‘Yep, sure is. Who’s this?’

‘John Key. You know. I’m mates with Richie McCaw.’

‘You got us into all that Cameron Slater stuff?’

‘Shhh! ForChrissakes… Anyway it wasn’t me.’

‘So what’s it now then?’

‘It’s about the US missile shield thing.’

‘That’s secret. What do you want to know?’

‘Just some information. It’s important.’

‘I’ll ask. [Quiet, unintelligible] ‘He’s mates with Richie McCaw’.

[New voice] ‘OK. Fire away. But if this comes up in that blog thing.’

‘How could it? Trust me. Listen. The US missile shield. Does it reach right over my place?’

‘Your place? No. Doesn’t come near it.’

‘What? I’m sure it does. It should. It must.’

‘Not on the map, mate. Not your place. Nowhere near. Not my place either.’

‘I’m not talking about your place. Why do you think I care about your place?’

‘You should see my valuations… Wow, month after month… I guess you’re the one to thank…’

‘OK. You’re rich. Everyone wants to be rich. But what about my place?’

‘No. Like I said, nowhere near.’

‘But it must be. It’s part of the US.’

‘The US? Last I heard we were joining up with China. Their embassy lent us the new guy over there. You’d be amazed what he knows.’

‘Will you listen to me?! My place...’

‘First thing he said. Your place part of China now.’

‘China? Hawaii’s not part of China!’

‘Hawaii? What’s Hawaii got to do with it?’

‘My place, you fool! The missile shield! The map!’

‘It’s right here. Auckland. A new map of New Zealand. 2014’

‘Auckland?! New Zealand?! Stuff Auckland! [unclear] New Zealand! Who cares about New Zealand?! I want to know about Hawaii. My house... Hawaii!!’

‘I’ll get the atlas…’

‘For pity’s sake! [unclear] Everywhere. Lunatics.’

‘Oh yes, I see, Hawaii’s covered. It’s a state I think.’

‘All of it? You’re sure? My whole house is right under the shield?’

‘Looks like it to me.’

‘The whole place? Right inside the line… No part sticking outside? The ensuite?’

[Tape breaks here]

the problem is that there may be a flattening try to buy anything that ticks a lot of boxes - 1300 listings on TradeMe - lowest ever. If you want something nice, reasonably priced - you have to pay!.

Listing always go down to 1300 over the holiday season, it'll return to over 2000 in Feb/March.

Many so called economist been posting comments from last two years, that house price will go down!! As I said it won't go down, it might stay stable or go up.

As the RBS mentioned today... In a crowded hall, exit doors are small

Maybe not this year, but never say never.

It's time to buy houses.

Correct bloodymigrant. New Zealand most expensive country in the world to buy - this on CNBC this morning! This is 2016's most pricey country http://video.cnbc.com/gallery/?video=3000480036