homes.co.nz Monthly Property Update – February 2019

The homes.co.nz Monthly Property Update is generated using homes.co.nz’s February 2019 HomesEstimates, providing an up-to-date perspective on house values around New Zealand.

Did you know?

Mumbai’s Antilia is a 27-storey residence, estimated to be worth over $1Billion USD and one of the most expensive in the world. In NZ, this is similar to the total value of Wellington’s Oriental Bay ($1.08B), Christchurch’s Sydenham ($1.15B), or Saint Marys Bay in Auckland ($1.58B).

To build up or out in Auckland?

Auckland prices are holding steady with prices only decreasing by 0.3% in the last 12 months and sales volumes remaining low. There has also been no significant sales uplift in Auckland’s higher density zones, such as those zoned for Terrace Housing and Apartments, since the introduction of The Auckland Unitary Plan in late 2016.

One way to “build up” is to build higher density properties. Auckland homeowners considering subdividing need to be aware of their property’s zone (these are available on homes.co.nz) and The Auckland Unitary Plan’s subdivision guidelines:

  • Single House zone sites must be a minimum of 600m2
  • Mixed Housing Urban zone sites must be a minimum of 300m2
  • Mixed Housing Suburban zone sites must be a minimum of 400m2
  • Terrace Housing and Apartment zone sites must be a minimum of 1200m2

By considering these subdivision guidelines, homes.co.nz has shown the potential for over 100,000 new properties by subdividing the current housing stock. This is an increase of Auckland’s housing stock of over 20%, all within the existing city limits.

Not everyone is going to be ready to build new properties on their back section, but this analysis does illustrate the potential for intensification in Auckland if the right regulations and the economic conditions exist.

Trends in our Main Cities

In one of the market’s busiest periods, homes.co.nz has compared our current HomesEstimates to this time in 2018. The stand out performers are Wellington and Dunedin with the median HomesEstimates increasing by 10.5% and 11.9%, respectively. Both also show no obvious signs of slowing any time soon.

Tauranga has also seen some strong growth in recent months, with our median HomesEstimates increasing by 2.3% in the last quarter, and 4.8% in the last 12 months.

Auckland and Christchurch remain flat and Economist Shamubeel Eaqub expects prices to hold steady, “Bank behaviour and house building being the main drivers for coming years.”

How do we calculate these figures?

The homes.co.nz Monthly Property Update is generated using homes.co.nz’s monthly HomesEstimates and provides an up-to-date perspective on house values around New Zealand. By valuing the entire housing stock, the homes.co.nz Monthly Property Update can compare median values from month to month in a consistent and reliable way. Our HomesEstimates are calculated for almost every home in New Zealand by an algorithm that identifies the relationships between sales prices and the features of a property.

NZ’s First Home Buyer HomesEstimate

The “First Home Buyer HomesEstimate” is homes.co.nz’s estimate of what a typical first home may cost. It is calculated to be the lower quartile HomesEstimate in a town.

Property values remain consistent for first home buyers. Although the loan-to-value restrictions on new mortgage loans have been eased from 1 January 2019, economist Shamubeel Eaqub says banks have “remained cautious” when lending and are keeping an eye on the Australian Royal Commission’s recent findings. For now, accessing low-deposit lending may be difficult.

New Zealand housing market is holding steady – Commentary from Shamubeel Eaqub

New Zealand house prices are holding firm, even though sales are lower. Falling house prices in Australia suggest caution, but there are some differences that may see a more resilient market in New Zealand, at least for a while.

Auckland has led the housing market cycle over the past decade. It came out of the slump first, roared into new highs and has lost momentum over the last two years. Despite slowing house sales, prices have generally held up.

However, data from homes.co.nz suggest the priciest suburbs have seen modest price declines. This is unsurprising, as there are fewer qualified buyers in for pricier homes.

One big constraint has been bank lending, which has gotten harder since mid-2016. It started with restrictions on high LVR, but banks have remained cautious even after they were relaxed. The Australian Royal Commission and rule changes there have spilled over to behaviour here too. Banks are choosier about how much they will lend. This will not change in a hurry. New capital rules proposed by the RBNZ will also make banks less willing to lend as aggressively as in recent decades.

But one big underlying issue refuses to go away. We aren’t building enough homes. Even though building consents are running at record highs, they may not all be built.

Rapidly rising building costs, lack of construction sector workers holding up many areas of work, lack of capital gains that often drive developer margins and slow sales are all creating uncertainty in the market. Our construction boom may not be big enough to solve our housing shortage. In contrast, Australia had a huge building boom, particularly apartments.

Housing demand is also holding up, with a growing population. Although Statistics New Zealand reckons migration figures may have been overstated by about 45,000 people. That means we need about 17,000 fewer homes than we previously thought. The housing shortage is still there, but perhaps not as big.

For now, the New Zealand housing market is holding steady. Bank behaviour and house building will be the main drivers for coming years.

Follow us on social media
The Data Team - homes.co.nz (Tom Lintern - Chief Data Scientist)

About the author

Leave a Reply

Your email address will not be published. Required fields are marked *