Nationwide housing values grew at their slowest rate since 2012 in the December year, but QV expects 'busy' start to 2019 thanks to the RBNZ loosening LVR restrictions

Nationwide housing values grew at their slowest rate for nearly seven years in the year to December, Quotable Value (QV) data shows, although the government valuer is optimistic the property market will be busy as 2019 activity gets underway.

QV says New Zealand wide residential property values increased 3.2% in the December year, and 1.2% in the December quarter. The annual growth rate is the slowest since an increase of 3.1% was recorded in the April 2012 year. Nonetheless the nationwide average value is now $682,938, a fresh record high.

In the Auckland region residential property values dropped 0.4% year-on-year, but increased 0.1% in the December quarter, putting the average value for the Auckland region at $1,048,145. 

QV general manager David Nagel sees potential for "a busy property market" in the early part of 2019. In large part this is due to the Reserve Bank's decision, announced in late November, to relax its rules for banks' high loan-to-value ratio (LVR) residential mortgage lending. The changes, which took effect from January 1, mean up to 20%, increased from 15%, of a bank's new mortgage loans to owner-occupiers can have deposits of less than 20%, and up to 5% of a bank's new mortgage loans to property investors can have deposits of less than 30%, lowered from 35%.

"The loosening of the LVR restrictions should enable some new first home buyers and investors to enter the market in the coming months. I don’t anticipate this impact to be overly significant, but it may help drive a busy property market in the early stages of 2019," says Nagel.

“I am particularly interested in the rental market where we’re seeing a lot of competition particularly in the Wellington market. According to the Trade Me Rental Price Index, the cost of rent in Wellington is now very similar to Auckland which really does say something. With the Healthy Homes Bill due take to effect later this year, I’ll be closely monitoring the impact this will have on the supply and costs of rental accommodation," adds Nagel.  

The Auckland break down

Drilling down into key Auckland areas, North Shore values dropped 1.1% in the December year and by 0.3% in the December quarter leaving the average North Shore value at $1,212,664. Values in the ex-Auckland City Council suburbs dropped 1.0% year-on-year and by 0.1% in the quarter, leaving the average value at $1,233,311. In Waitakere values fell 0.2% year-on-year and by 0.2% in the quarter giving an average value of $822,906. Manukau values increased 1.2% year-on-year and by 0.9% over the quarter to give an average of $906,658. Further out from the city centre, Papakura values rose 0.6% year-on-year and by 0.2% in the quarter giving an average value of $701,230, Franklin values increased 1.1% year-on-year leaving the average at $673,679, and to the north Rodney values rose 1.1% year-on-year giving an average value of $950,940. 

“It’s fairly steady here in Auckland, with well-presented properties close to services and amenities continuing to sell well. Investor demand appears to remain fairly steady although possibly it has eased back over the past few months," says QV Auckland property consultant, Hugh Robson. 

Wellington values rise & rental competition heats up

In the Wellington region values rose 7.8% in the December year, and rose 3.2% during the December quarter, lifting the average value to $688,074.

Wellington City values gained 7.4% year-on-year and rose 2.3% in the December quarter, leaving the average value at $813,052. Values in Upper Hutt rose 12.1% year-on-year and 5.7% in the December quarter to an average of $526,702. Lower Hutt rose 6.7% year-on-year and 4.2% in the quarter with the average value at $559,319. Porirua rose 9.4% year-on-year 5.3% in the quarter to an average of $591,421. And Kapiti Coast values increased 5.7% year-on-year and 2.2% in the December quarter with the average at $577,030.

“Tight supply, low interest rates, as well as a slight relaxing of the loan-to-value ratios is likely to combine to form a relatively buoyant property market at the start of 2019. Despite this, value growth is expected to continue to moderate over 2019 as affordability issues put a damper on the market," QV Wellington senior consultant, David Cornford says.

“First home buyers have had a strong presence in the market over the last two years and we expect this to continue into 2019, particularly given a slight relaxing of LVRs.”

“The extremely competitive rental market has also meant tenants are increasingly choosing to renew their fixed terms or roll over their leases. It’ll be interesting to see what effect the abolishment of letting fees and increased compliance costs will have on rents over 2019," adds Cornford.

A mixed picture elsewhere

In Christchurch QV says there has been a continuation of recent trends, with values either holding or dropping slightly. Values increased 0.5% over the December quarter, with the average Christchurch value at $496,562.    

QV Christchurch property consultant Hamish Collins says real estate agents are reporting most recent activity is from first home buyers in the $350,000 to $450,000 value range.

In Hamilton home values dropped 0.2% in the December quarter, but increased 5.0% in the December year. The average value in Hamilton is $570,886. Tauranga home values rose 3.9% year-on-year and by 1.6% during the December quarter leaving the average value at $720,645.

Values in the Western Bay of Plenty rose 4.9% year-on-year and 3.8% during the December quarter, putting the average value in the district at $654,083.

In Dunedin values surged 11.2% in the December year and rose 3.5% in the December quarter, leaving the average value in the city at $434,903.

Nelson residential property values recorded an 8.4% annual rise, and rose 2.4% in the December quarter. The average Nelson value is $601,571. Values in the Tasman District rose 6.0% year-on-year and 1.0% in the December quarter, with the average value in the Tasman district $589,630.  

In the Hawke's Bay Napier values jumped 10.2% year-on-year and rose 3.0% in the December quarter, putting the average value at $526,506, QV says. Hastings values jumped 12.1% year-on-year and 7.4% during the December quarter lifting the average value to $498,871.  

Elsewhere in the North Island QV says Kawerau, Carterton and South Waikato lead the way in quarterly growth, with value growth of 22.7%, 9.9% and 9.1% respectively. In terms of annual growth, Kawerau lead the way, surging 30.1% to an average of $245,137, followed by Wairoa at 27.4% to an average of $198,666 and Ruapehu at 20.9% to an average of $206,954.

In the South Island QV says the Southland, Invercargill and Gore regions lead the way in quarterly growth, with increases of 6.8%, 3.2% and 2.6% respectively. Invercargill recorded the strongest annual growth of 11.6% to an average of $286,275, followed by Nelson's 8.4% and Central Otago's 8.4% to an average of $506,706.    

More of the same predicted

Commenting on the QV data, CoreLogic head of research Nick Goodall says the December QV House Price Index closed out 2018 in a relatively similar way to the year before, with continued weakness in the bigger cities and inconsistent growth elsewhere.

"2019 is likely to bring more of the same, with many eyes on the Government, Reserve Bank and the banks themselves as they hold so many of the influencer cards,” says Goodall.

Annual change in values  

QV house price index

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69 Comments

Oh oh.. don't think I'm reading those charts right.. Auckland regions have dropped... pretty sure that wasn't the story being published..

How about for all to see..
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=121...

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16

"Auckland's median sale price was down 5.5 percent on the previous year, to $825,000"
"The median sales price for lifestyle properties is $1.35 million, down from $1.45 million the year before"

https://www.oneroof.co.nz/news/35852

Oneroof really did report this! Now, let's all spare a moment of silence for this rare act of Spruiker honesty.

RP time to have a cuppa to realise we're not dreaming.. or hallucinating

Yeah I reckon!

Talk about cognitive dissonance.................

Where are your mates? Finding a new job.. you must be quite lonely.. no wonder you're getting defensive

Luckily most of my mates aren't losers wasting time trolling for lolz.

Ah so you're the odd one out, no wonder they ditched you..

Reality is that housing market is down since last few months and November / December were really bad and now all related to real estate business are hoping and going with positive attituted (Forget the bad dream of last few months) and will now all depends if the market supports that attituted or go downhill.

More than the LVR it should have been the low interest rate that should be mentioned as the reason to jusitfy the theory / support that market will go up in early 2019.

Very Important period as will make or break the market.

More 'cooling property prices ' news.. and so the vibe is spreading for investors have gauged the property market has changed.. only going to spread..

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=121...

From your link - "Retirement village stocks feel the brunt of cooling property market"

Saw the following posted 6 days ago on Linkedin.

http://iforce.co.nz/i/sm3ozy5w.g53.png

Retirement Villages:

Ryman Healthcare - 39 Projects totaling $899 Million
Summerset Management - 37 Projects totaling $741 Million
Metlifecare Auckland - 25 Projects totaling $679 Million
Oceania Group - 18 Projects totaling $381 Million
Arvida Group - 14 Projects totaling $321 Million

Same story as Aussie, before you know it, there will be an oversupply

The property market is going to be red hot scorching for Jan - Feb, the long awaited crash failed to appear and buyers are getting desperate.

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12

Buyers getting desperate? Nope, not here in Auckland, its progressively been turning into a buyers market over the last 6 months or more and with most places no longer available for foreign buyers, local buyers can afford to wait and be picky.

Whatever you are smoking isn't doing good things to you.

Whatever they were taking last year hasn't worn out

You will see.

Dreaming

Interesting how different the numbers are from different sources.

"In the Auckland region residential property values dropped 0.4% year-on-year, but increased 0.1% in the December quarter, putting the average value for the Auckland region at $1,048,145. ". From this story.

However, prices in the country's two biggest housing markets - Auckland and Christchurch - continued to plateau. Auckland's median sale price was down 5.5 percent on the previous year, to $825,000, " from https://www.oneroof.co.nz/news/35852

Average vs median vs HPI. So many numbers to cherry pick

It's crazy, huh.
"Hey guys, we have this HPI which will give us the best indication of monthly house price movements. But let's just always focus on the averages and medians, instead."

Of course, New Zealand is a magical fairy land untouched by pesky foreign notions of 'risk' and 'value'. In 10 years time the average house price will be 20 times the median salary and Auckland will be more expensive than London and New York. I know this because past results indicate future performance and also we have things like beaches, which no other country has.

Core Logic update

30/11/18 95.65% of 2017 CV
06/01/19 95.21% "
13/01/19 96.96% "

I have 3 weeks until my TDs start to mature. Looks like a rollover is on the cards as nothing else looks attractive.

Yeah my TD's come out in April and May and rates are unchanged at 3.4% at present. Hopefully banks sharpen up a bit to attract and retain deposits to meet these new bank capital requirements. There is only so much money to go round.

Interesting - but CV does not mean anything as it's computer-generated and council didn't actually physically inspect the property. In fact, Auckland Council explicitly disclaims any usage of it as value.

Check out this article which I came across: https://nzpremiumhomes.com/helpful-information/what-does-cv-rv-gv-and-ma...

CV isn't irrelevant. Most of the value in most properties is not the box of sticks on top of the dirt, its the dirt itself, and that is not too hard to get right. X m2 of flat/sloping etc land in Y suburb is data the council does have.
And they do also know the house basic specs.. when it was built, what it was built of, how big it is. Its not perfect, but as a ballpark guess its a good start.

As a good starting point to what? Market value? Very often and especially for older houses, there's no way of telling the exact market value based on CV because the house was never updated on the system even if renovations etc were carried out extensively. Frankly, market value is whatever that a willing buyer meets a willing seller. And you can only decide that if you put the property on the market. The article does list out factors as to why CV is likely inaccurate, and I agree. Neighbour's house has same CV as me on the same plot of land. My house is newly renovated and is likely to sell at a higher (how much higher is a guess) price if we both go on the market at the same time.

Yes, a good start to approximate market value.

CV stand for Capital Value, yes it certainly isn't as accurate as an RV but it still assesses Value

RV actually stands for rating valuation not registered valuation.

The old RV used to stand for rating valuation which is now superseded by CV, (capital valuation). Now RV stands for registered valuation as in a valuation done by a registered valuer. (or it could be recreational vehicle lol)

This project with $20m of new homes juat sold out in last 3 weeks https://www.thirtysevenglen.com

It was priced very well for the area. Brand new house/townhouse in St Heliers for $899K.

Whereas you have similar or worse inventory in Stonefields & Glen Innes for $1.1M.

quite stylish and reasonably priced

The regions still ticking along, fueled by AExit (economic refugees fleeing Auckland so they can buy an affordable house).

yeah. A couple of my neighbours just bought a few in Rotorua and Taranaki.

Trying to boost the market sentiment - vested interest.

QV general manager David Nagel sees potential for "a busy property market" in the early part of 2019.

No harm in expecting but market in downturn mode does not change in a month or two.

Game on, what do you reckon?

The properties that sold in St Heliers quickly were not in the "affordable" range:.
Only "Rich Pricks" would have the money to buy them.
They hardly qualify for Kiwibuild, but I bet whasthisname will add them to his boast sheet.

But they were affordable for that area I think? Not sure if you think that Kiwibuild should be building in those areas and catering to everyone and anyone. Supply/demand rules as usual, and choice areas are always going to be popular.

"...the government valuer is optimistic the property market will be busy as 2019 activity gets underway."
Why are they and this site generally putting such an "optimistic" spin on this data instead of just telling it like it is? I thought the govt didn't want prices to keep going up because affordability is so bad. Are they concerned we are about head into steep declines like Australia because we have a similar bubble? And what about this "steady investor activity"? Really? Who are these people still newly investing at the top of a bubble? Not experienced investors, surely, and not foreign buyers unless it's in big developments (which will really need to sell for high prices now).

QV is the third party valuer which regional councils outsource the automated valuation work to. It's not the "Government Valuer" as appointed by any legislation.

Well they are clearly trying to spin a positive narrative for some reason. Perhaps because it would be so bad for the house-of-cards economy if things weren't actually so rosy.

so we start the year with Auckland inventories at

12230 for interest.co.nz and
11296 for Trade me

So lets see how fast these fly off the shelves

Warning: It may be preferable to watch some grass growing

These inventories were much higher in November.

Yes, Some sold, some got pulled off while people went away for xmas holidays. Lets see how fast they bounce back.

I recall Nic Johnson making a bet that these inventories would hit 15'000 by X-mas 2018. He's been very quiet lately, given that he used to post by the dozen

"The factors at play across the Tasman are particular to Australia - such as oversupply and difficulties in the lending market."
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=121...

I put it to you that these are exactly the factors at play here. We have a media narrative that is saying there is an affordability crisis driven by an undersupply. Really we are now having an oversupply in Auckland and other places (like Tauranga) and prices are too high for people to afford, and there has been loose lending practices by the banks for years. It is not a good situation, very similar to Australia, and the same banks.

We don't have oversupply - yet. Once things get to a point and a bunch of recent arrivals decide that NZ isn't for them, then we will have an overspupply.. and possibly in quite a rush.

Do a lot of those recent arrivals work in the booming construction industry by any chance? , And will leave when work starts to slow down? That's what happened in Ireland and Spain, compounding the bust. We certainly don't have a shortage of housing in Auckland, a shortage of affordable housing, yes, because everything is at bubble prices and people can't afford it.

We don't have an oversupply of housing in Auckland and not the same credit crunch, so NO it's not the same as Sydney and Melbourne

Yvil, when comparing to Auckland, are you saying there is now an oversupply of "affordable" housing in Sydney and Melbourne or an undersupply? Careful now, think more carefully before trying to justify how you think Auckland is so different.....

Yvil, Sydney is having a shortage currently.. More apartments are coming into market in 2019-2020.
Keep that "NZ/Auckland is special" glasses on and you'll be OK.

Yes, still a huge amount of new apartments still to come onto the market in Sydney, with the current new ones being discounted and prices dropping over 1% a month currently. It's getting really ugly.

With the Opal Tower thing in the news I imagine it just got a lot harder to get a buyer across the line on a new apartment.

Thanks Voiceofreason, my point exactly

Um - Yvil, what unique housing shortage are you trying to invent for Auckland exactly? I read somewhere, Sydney and Melbourne (where there's also an affordable housing shortage) its stand alone high end houses that are suffering bigger discounts and not so much the cheaper apartments. It's hardly rocket science the looming oversupply of apartments will only serve to exacerbate the problem going forward.

https://www.domain.com.au/news/the-sydney-suburbs-where-apartments-are-s...

https://www.macrobusiness.com.au/2018/09/cba-house-prices-will-continue-...

Sorry Yvil, your Auckland is no different than mine!

The Trade Me Property Price Index measures trends in the expectations of selling prices for residential property listings added to Trade Me Property by real estate agents and private sellers over the past three months.

So, basically its a firm measure of hopes and dreams. At least all the other measures are based on something real.

But since you bought it up a 0.1% increase in asking prices in Auckland, and that -7.0% drop in 5+bedroom houses in Auckland, really not looking so good.
https://property.trademe.co.nz/media/204968/Property-Price-Index-1-merge...

So if I list my $1mil house on TradeMe right now for $5mil, does that mean that market prices are suddenly higher?

How much does it cost to list it? Could be worth a laugh to list it for a billion or so. See if you can mess with them.

@Yvil, dude that's the "Asking Price" in the report.
In reality, you can ask for anything you like but finding someone willing to pay for it is an entirely different story!

Indeed

I think Joe Wilkes has the best take - https://www.youtube.com/watch?v=NhcSnscqQZk

Thanks for the link GXY, nice to see an analysis on Auckland rather than copy and paste Sydney's analysis. Certainly not looking great with ring-fencing of losses and CGT on the horizon on top of the FBB.

Small note, Joe does get it wrong when he says Auckland is building more per capita than Sydney or Melbourne because the graph (provided by David Norman I think) starts at an indexed level, it's not counting and comparing the number of new builds.

No problem. It's worth checking out his videos driving around auckland looking at the new builds happening. I found it shocking TBH.

.

Immigration as a driving force (data from kiwiblog):
Oct 17 year vs Oct 18 year.
Migrants gone from 99,650 to 96,760 (a 2.9% reduction)
NZers returning home from dropped from 32,140 to 31,300 (a 2.6% reduction)
Citizens or residents leaving NZ gone from 61,060 to 66,430 (a 8.8% increase)

Net Immigration has only fallen by 8900 in last year (70700 - 61800), mostly as a result of more kiwis leaving. Another 'big' campaign issue that the coalition hasn't really done anything about.

“The Man” was right once again about the steady stable market of Christchurch!
Prices up for December but otherwise steady which is not what the expert Gordon keeps saying about the Chch market dropping!
“The Man” also stated that the reason prices weren’t increasing at a rapid pace is due to first home buyers in ChCh buying inThe 350 to 450k price!
You do not buy a palace for this amount in ChCh but the intelligent ones are saying we need to buy now because there is nothing surer than prices increasing in ChCh in the future!!

Uhhh how are these figures based on the December Quarter when they’re based on comparing “Sept 2018 to Dec 2018” on the QV Property Trends page? That’s 4 months. Or am I just a bit dense?
https://www.qv.co.nz/property-trends/residential-house-values
Sep18 to Dec18 nationwide = 1.2% vs 0.6% Oct18 to Dec18

Busy market in first quarter..... YES provided vendor is ready to sell as per current market situation... Which is Downward.