Wellington leads while Auckland moves ... slowly
THE CAPITAL recorded one of the country’s highest lifts in average property values last month but Wellington City’s momentum could be starting to wane, reports one property data analysis.
According to the CoreLogic QV House Price Index, Wellington’s average house value rose 7.4 percent, to $715,740, for the year ending September.
Dunedin and Invercargill recorded higher year-on-year gains, with the former up 12.8 percent.
Over the past quarter, Dunedin was the best performing main city, with a 2.9 percent rise, whereas Wellington could muster only 0.8 percent.
“In Wellington City, there are signs of recent momentum beginning to wane,” the report says.
“While property values have increased 4.1 percent in the past year, the flat quarterly result indicates potential fatigue, as buyers consider their options and look to move into one of the surrounding cities.
“Both Hutt City (13.2 percent) and Upper Hutt City (15.3 percent) have seen significantly greater growth over the past year - no doubt assisted by lower property prices.”
The average value in Wellington City is now $827,000 compared to $608,000 in Lower Hutt and $575,000 in Upper Hutt.
Nationwide, average property values rose by 0.4 percent from August to September, and lifted the annual growth rate from 2.3 percent to 2.4 percent.
“The NZ housing market showed signs of strengthening across the board in September with most main urban areas experiencing a lift in property values,” the report says.
“Property values in Auckland have also shown signs of new life with the quarterly percentage change (0.0 percent) moving out of the negatives for the first time in 2019, however values remain 1.9 percent below the same time last year.”
CoreLogic head of research, Nick Goodall, says consistently low mortgage interest rates are encouraging “definite signs of new life in the property market” as more potential buyers enter it.
“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 (five years), 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 buyers - first-home buyers and investors alike.”
Goodall says the lending environment also has eased over the past month, with another drop in the Official Cash Rate likely in November.
“So the ‘lower for longer’ outlook will ensure mortgage interest rates stay attractive to borrowers.
“The reduction in the serviceability rates, set by the banks themselves, will also mean more active borrowers although with business confidence very weak, and doubts persisting about the overall economy, the enthusiasm for people to take on more debt may be waning.”