The highest value growth has mainly been concentrated in the lower North Island - the biggest value declines have mainly been in Auckland and Christchurch

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

LOL.. one of the top ten is "Cannons Creek".. we used to call it Cannibal Creek.
I drove through in Jan this year and still the same as I remembered it

So you used to be as much of a dick then as you are now.

Thanks for sharing.

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 most gut wrenching roller coaster rides can be most expensive. Notable feature of this one is you no longer have to wait in line!

The view from the front seat is amazing as you crest over the top. Lets hope Auckland doesn't lose her stomach in the impending swoon.

Performance over the past 12 months has very little bearing on performance over the next 12 months.
Little value can be taken from this report.

but that was said on the way up - and it was dismissed by many here - why should it be any different on the way down ?

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.

I don't disagree - but some who post on this site seem to think that the past does predict the future. It's almost as bad as those who are predicting a crash with every second breath (share or housing).

Nice title for the article Greg it suggests that after a slow ascent to the top that gravity can really have an impact on the way down. Buckle up!

Is anyone surprised. Auckland had a fantastic run and I congratulate those who had the courage to invest there. Christchurch of course is a cot case and things will only get worse as more and more people move to areas that are safer and more pleasant to live in.

With half of the worst performed areas coming from Christchurch, I feel "Theman2" will be seething .....

He would normally be here extolling the virtues of Christchurch. But I hear he is under one of his houses trying to shore it up, as it has come off it's piles.

Zzzzz..... In the long run house prices increase with the rate of inflation. Buying for a capital gain is a TERRIBLE idea. Much better to invest in a productive business through the stock market.

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.

Baron von Man2 Hausen?

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.

Standing ovation for skudiv, (slow clap), someone who ignores history's lessons has nothing of use to teach others and has no future.

Just because it has in recent times, doesn't mean it always will.

Still predicting doom and gloom? A look at your history could have predicted you would.

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.

Skudiv is a Property Maintenance Manager, so I'd assume he has some skin in the game.

Nzdan, predicting doom & gloom is one thing, suggesting viable ways FHBs can protect hard saved money using a little patience is something else.

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.

Yeah, it's possible John Wheeler might well reappear with a comment "I told you so". A lot can happen in six months.....

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')

A 7 percent fall in house-price growth would suggest that what was once growing at...say.... 10% p.a. is now growing at 9.3% p.a.

pretty misleading for anyone skimming the headlines when it is actually a 7% fall they are reporting - I guess the Auckland migration has stalled ...Did they run out of boats to handle the evacuation from the city of sails? Equity? what equity?

For those that are interested in the article

https://www.nzherald.co.nz/hawkes-bay-today/news/article.cfm?c_id=150346...

When prices fall, focus on the positive spin - improving housing affordability ...

I was at an auction in Hastings Wednesday all but one sold some for more than we expected and others less . There was not frantic bidding . I also read the HBT headline but medians are not an excact science so perhaps watch this space would be more appropriate .

'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-mark...

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.

Yankiwi,

With approximately 17% exposure of your net worth to real estate (a sixth of available funds to purchase), and 83% in cash, (and no debt) you are in a great position to take advantage of opportunities as they arise.

I'm not so sure that Yankiwi is as quite liquid as he says he is.. he's got very hot and bothered today about the Hawkes Bay median price fall of 30k in 3 months, to the extent that he keeps posting responses to himself.

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.

If house prices drop 50% you’ll put in an extra 20% and buy a better house for the same price as you bought your previous house for? Because you will be selling for 20% less than you paid.

Nzdan, a tricky approach when relying on equity in the first house to do it - lol!

Probably just throw the old house out and buy another one. Much like an Oil Tycoon disposes of their Rolls Royce when the ash tray is full.

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Cannot wait until housing ceases to become a never ending casino for speculators and gets back to being homes for people. These years have been some of the economically grossest I can recall.

Quote of the facts:
The top 10 places, which had GROWTH IN PROPERTY VALUES OF AT LEAST 15% in the last 12 months, were…
The worst 10 places, which all had CAPITAL VALUE DECLINES OF 3-5% OVER the last 12 months were...

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.