High New Zealand house prices put a lid on traditional September bounce

Tuesday, 1 October 2019

Salaries may have to catch up to house price growth before the property market can start booming again, new data indicates.

QV statistics for September show subdued prices around the country, which the property data firm said was probably due to house prices pushing the limits of what buyers could afford.

New Plymouth had the biggest increase in values in the three months to the end of September, up 3 per cent.

Whangarei and Napier had the biggest quarterly drop, down 0.9 per cent. The two cities' values were up 1.6 per cent and 8.2 per cent on an annual basis.

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* Central Auckland house prices fall fastest: QV**

Auckland's average value did not move in the quarter, the first time this year there was no price fall. Values remain 1.9 per cent below where they were last year.

QV general manager David Nagel said the main cities were all experiencing relatively subdued value growth.

'Despite this, we are still seeing pockets within these locations that are thriving with reports of multiple offers on good quality affordable housing stock, indicating the buyers are still out there if it's the right property.'

He said, in some places, prices were unlikely to rise much until there was a noticeable increase in incomes.

'Affordability is counteracting any significant growth over the next 12 months and it might take until we some salary inflation to counteract the imbalance between what we get paid and what we have to spend to live.'

He said the market was reacting and a lot of development was in the affordable segments of the market.

Dunedin was the standout of the cities, up 2.9 per cent over the quarter and 12.8 per cent year-on-year.

Auckland's weakness was greater in the coastal areas of the North Shore as well as some of the more expensive suburbs close to the CBD. St Mary's Bay values fell 9 per cent year-on-year and Herne Bay fell 8 per cent.

'The Auckland residential market remains fairly quiet as we head into spring,' said Auckland property consultant Hugh Robson.

'Typically, we should see a slight to moderate increase in the number of listings over the next two to three months, as people wanting to sell place their properties on the market hoping for a sale before Christmas.

'In West Auckland, first home buyers continue to represent a good percentage of the sales occurring in the Waitakere area. These properties are generally in the $570,000 to $800,000 price range. We note there has been an increase in the number of properties being advertised with an asking price.'

There was also strong levels of demand from first-home buyers in South Auckland, he said. 'Historically, some pockets in South Auckland are predominantly investors driven but we have yet to notice a pickup of investor activities in those areas.' 

Wellington values were up 0.8 per cent and Christchurch's dropped 0.5 per cent.

QV senior consultant David Cornford said there had been 'modest growth' in the more affordable locations of Hutt Valley and Porirua.

Nationally, the average value increased 2.4 per cent compared to 2018, to $691,460.

​Corelogic head of research Nick Goodall said the data showed signs of new life in the property market, despite the lack of big increases.

'Listings remain low, which is contributing to price pressure around much of the country. Even in Auckland, where listings have increased over the longer term, they're lower than at the same time last year and this has meant price pressure where demand is relatively high. This is generally in the least expensive areas which appeal to a number of buyer, first-home buyers and investors alike.'

He said sales volumes should lift through the rest of the year but pricier places may not be able to keep up the same level of growth.