Aucklanddrop shows price risk
New data shows Auckland’s house prices have fallen, year-onyear, for the first time since 2011 and Wairarapa’s recently growth may be at risk.
Economists say the largest city could lead the rest of the country into a decline in house prices. But some areas are more exposed than others.
Though not among Infometrics’ Top 10 at risk of value decline, South Wairarapa has experienced huge gains in the last couple of years, but unlike Auckland, it has not had the accompanying population growth.
South Wairarapa District had 45.7 per cent value growth, 5.8 per cent population growth but a 7.7 per cent increase in stock.
Nick Goodall, head of research at CoreLogic, said there were a number of areas that had seen strong growth in prices but relatively restrained population growth, which could suggest an over-investment in property.
Infometrics chief forecaster Gareth Kiernan compiled a list of the top 10 places most vulnerable to price falls. Wairoa topped the list. There, house prices had risen 22 per cent between September 2014 and March 2017.
Wairoa: House prices up 22% between Sep 2014 and Mar 2017
Gore: House prices up 18% between Dec 2014 and Jun 2017
Kawerau: Up 79% between Dec 2014 and Jun 2017
SouthWaikato: Up 66% between Jun 2014 and Jun 2017
Timaru: Up 47% between Dec 2010 and Jun 2017
Ashburton: Up 42% between Dec 2010 and Sep 2016
Invercargill: Up 18% between Mar 2015 and Mar 2017
Waitaki: Up 35% between Jun 2013 and Jun 2017
Hamilton: Up 69% between Jun 2011 and Jun 2017
Central Otago: Up 62% between Sep 2011 and Jun 2017
That was followed by Gore and Kawerau, South Waikato, Timaru and Ashburton.
‘‘There’s a common theme among the top eight - to varying degrees - that they’re smaller outlying areas that have been caught up in the tail end of the boom, without any real solid fundamentals to justify the lift – population growth might have been reasonably strong, but not to the degree that justifies some of the house prices lifts we’ve seen,’’ Kiernan said.
‘‘Timaru and Ashburton are obviously a little different as they’ve had the quake refugee effect in early years as well, but then changes around irrigation/ water policy could have potential negative effects for their economies over the medium-term.’’
Even Hamilton and Central Otago registered as a potential concern, he said, and featured at nine and 10 on the list.
‘‘Hamilton and Central Otago reflect spillovers from nearby booming markets that have helped drive their own markets up. However, they are vulnerable to slowdowns in the Auckland and Queenstown markets.’’