The latest QV House Price stats are out and there are some signs of values slowing in Auckland, Hamilton and Tauranga, but Wellington hasn’t paused for breath as values continue to rise there – at a rate of 21% annually which is faster than at any time leading into the last peak of the market in 2007. Meanwhile Christchurch is still flat and Dunedin values continue to rise at around 3-4% quarterly.
The first of which is our weekly tracking of Bank-ordered valuations, most often to support lending decisions. This provides us with a great pre-sales measure of market demand. In Auckland these remain flat compared to activity prior to the LVR announcement in late July. This is seasonally very weak as we would have expected activity from mid-Winter to pick up in September.
Outside Auckland, activity hasn’t been quite as subdued with a small lift from Winter but nothing like the lift we saw last year and that we would typically expect in September.

Looking into the main centres, activity has slowed in Hamilton where volumes are about 5% lower than witnessed in Winter.

In Tauranga, activity has been a bit more volatile, but after strong volumes through August and most of September we’ve seen a significant drop away in the last two weeks.
The Wellington region remains relatively busy – most recently in the more affordable outer cities of Porirua and Upper Hutt.

Christchurch remains flat but Dunedin is certainly enjoying a healthy spring lift with the last two weeks up at record levels for the City. According to our Buyer Classification series, where we quantify the influence of Auckland based investors around the rest of the country, we have now seen them increase their presence in Dunedin too, with 6% of sales to them in Q3 – up from a recent average of only 3%. Previously they hadn’t ventured too far from the top half of the North Island in any significant numbers. This change could be due to the much more appealing rental yield in the University City combined with solid recent capital growth.

Around the rest of the country it’s a bit of a mixed bag. The South of the North Island (including Palmerston North and Kapiti Coast) has seen increased activity, while many cities across the middle section of the North Island (New Plymouth, Rotorua, parts of Hawke’s Bay) are flat or slightly dropping. Whangarei in the North, is well down on Winter volumes.
Jumping to the South Island and activity is similarly mixed – Queenstown had a bumper Winter which it has not been able to sustain, Nelson has sprung out of a moderate Winter and Invercargill was trending down until the last two weeks where it has seen a lift.

Secondly, the listings side of the equation is also very telling. Almost all regions are more than 20% down on total listings when compared to the same time last year.  Auckland is one of the few regions to buck the trend as a weak sales period has meant total listings are 2% higher than the same time last year, although it’s worth noting this is off a low base with low stock levels existing for a couple of years now. Now the question in Auckland is centred on the quality of stock, with good properties still selling quickly and older stock perhaps going a bit stale as active buyers in the market continually pass them by.

A slight lift in new listings coming onto the market recently ill help improve supply in some areas like Otago, Waikato and Wellington but many regions are still near all-time low stock levels which will continue to put pressure on the property market.

Looking to the future then, let’s take a quick look at the economic factors affecting the demand and supply drivers in the market.

While demand has been hit by the latest round of LVR limits the low interest rate environment still makes borrowing attractive for those able to get the required deposit. And while the net migration ‘tide’ had started to turn, including back across the Tasman, the latest figures showed a flattening of migrants into the country and stalling of those leaving. This means we’re still seeing a strong overall inflow and therefore more people looking for homes.

Then on the supply side, specifically in Auckland, the Unitary Plan should start to have an impact but as with any development/regulatory changes it’s going to take a while for processes to catch up so options for buyers will remain constrained for the time-being.
​
All of this means it’s unlikely that values will be heading south any time soon, which will no doubt continue to draw the attention of both the Government and RBNZ. My pick? More intervention to come.