Suburbs where house prices are falling - and rising - fastest

Buyers and sellers are facing mixed fortunes around the country, new data from property research firm Cotality shows.

Its latest update of suburb-level data shows 56 percent of suburbs across the country had either stable or rising standalone house values over the three months to June.

The fastest price growth was in Southland and the West Coast, home to 21 of the 25 suburbs where house values have risen fastest, by at least 10 percent over the past year.

Among the largest increases for standalone houses over the past year were Lorneville in Invercargill, Wallacetown in Southland District, Ngahere in Grey District and Te Anau in Southland District, all recording annual growth of more than 14 percent.

“The areas that have seen values growth, whether that’s townhouses or houses, are smaller parts of the country, rural markets, smaller towns and suburbs and so-called provincial areas, parts of Southland, parts of Canterbury, where farming is doing well and that will be providing a bit more cashflow and a bit more confidence in those markets,” Cotality NZ chief property economist Kelvin Davidson said.

“They’re not booming but there’s a little bit more growth as opposed to main centres… that economic performance is lagging a bit.”

He said areas that had experienced growth tended to be at the more affordable end of the spectrum to start with.

“There’s always lots of different factors but certainly affordability tells you something and I think the shape of the economy at the moment is driving some of this as well.”

The national median value of a standalone house fell 0.1 percent in the quarter and is still 17 percent below the peak, at $843,199. Upper Hutt has had the biggest fall from the peak.

Davidson said buyers remained in control of pricing negotiations and the start of the year had been weaker for sales activity than expected.

“It’s always difficult to cast a wide net across the various trends at a suburb level and come to a clear conclusion about just one or two key drivers,” he said.

“However, in many of those stronger performing suburbs, the two most likely factors for the double-digit growth are their affordability relative to the rest of the country and robust farming sector which is supporting cash flow and confidence.”

Auckland suburbs featured prominently among the country’s weakest performing areas.

For standalone houses, Wesley recorded an annual decline of 7.8 percent, while Wiri in Manukau fell 7.4 percent and Glen Innes declined 6.9 percent.

Davidson said Auckland’s key restraints for values include a strong new supply pipeline and cautious buyer sentiment.

“Auckland experienced one of the strongest upswings during the pandemic period, which pushed values to very elevated levels and created significant affordability challenges for many buyers,” he said.

“Values for all property types across the city are about 23 percent below their January 2022 peak of $1.36 million, but they remain above pre-pandemic levels.”

He said there were similar factors at play in Wellington, along with public sector cuts.

“Auckland and Wellington are some of the weaker-performing parts of the country, but, of course, prior to this latest weak phase, they had seen quite a bit of growth … what goes up does eventually come down again.”

He said there was still demand in markets like Lower Hutt but at a lower price point and from buyers who had more bargaining power.

For townhouses and flats, 52 percent of suburbs recorded either stable or rising values over the three months.

Davidson said townhouses were not experiencing notable underperformance.

“People be anticipating that townhouse values would be maybe underperforming a little bit given the supply pipeline, but we’re not really seeing it.

“If you look at Auckland, townhouse values are down for sure, but so are houses. I think what it shows is, yes, there’s lots of supply of townhouses, but still decent demand as well, at least in relative terms.”

Auckland had the highest number of most expensive suburbs, including Herne Bay at a median $3.03 million, St Mary’s Bay at a median $2.87m and Parnell at a median $2.43m.

At the other end of the spectrum, eight suburbs recorded median house values below $300,000, including Ikamatua in Buller, Clinton in Clutha and Waiouru in Ruapehu.

Davidson said elevated listings and subdued sales volumes were likely to remain key features of the market in the months ahead, helping to explain why some suburbs were outperforming and others had softened.

“Buyers generally still have a reasonable amount of choice, and that means some markets are finding it harder to generate price growth than others,” he said.

“The next three to six months are likely to bring more of the same patterns we’ve seen at a suburb level, with affordability remaining a key driver of demand and property values generally tracking sideways at a national level.”

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