Regional appeal growing for smaller investors

by NZ Adviser02 Nov 2016
NZ Adviser reported yesterday that home value growth across New Zealand has slowed over October, according to the latest QV House Price Index. 

QV national spokesperson Andrea Rush also noted that less established investors are struggling to come up with the new 40% deposit requirement and are seeking to buy outside the more expensive areas.  

“Those investors shut out of more expensive markets appear to be turning their sights to more affordable markets in relatively close proximity to North Island main centres such as the Western Bay of Plenty, Whangarei, Rotorua and the Waikato District and all of these areas continue to see very strong value growth,” said Rush.

In contrast, Rush said, “CoreLogic Buyer Classification Data shows that 34% of investors with five or more properties do not need to raise a mortgage so are not affected by the new LVR rules.”

In Hamilton, the data showed that home values across the city rose 25.0% year on year and 4.7% over the past three months with the average value now $537,388.

But QV homevalue Hamilton valuer, Stephen Hare said there is a noticeable drop in investor activity since the LVR rules came into play.  

“It appears there is still demand for residential properties in the Hamilton market from local buyers, first home buyers and out of town buyers relocating to Hamilton.

“However, the latest LVR restrictions have definitely had an impact in terms of reducing the level of investor demand and activity in the market,” said Hare.
“We continue to see more properties being passed in at auction than we did in the first half of the year prior to the new LVR restrictions being announced.”

In Wellington, QV homevalue general manager, David Nagel said the latest LVR restrictions are not affecting the market hugely and local investors are still very active across the region.

Home values across the wider Wellington region rose 21.1% year on year and 6.6% over the past three months and values are now 22.6% higher than in the previous peak of 2007. The average value across the wider region there is now $558,886.

“The Wellington housing market is still characterised by strong demand from buyers and investors and a shortage of supply of properties on the market. To date the usual annual seasonal surge in property listings has not eventuated,” said Nagel.

“The Hutt Valley market continues to show strong value growth and this is primarily down to there being more affordable, entry-level properties in the Hutt Valley both for first home buyers and investors.

“The Kapiti Coast market is also continuing to experience high demand as it develops well into a serious alternative for Wellingtonians. Particularly with new motorway and infrastructure development underway - which is hoped will stabilise and possibly reduce the commuting distance between Wellington and the Kapiti Coast.”

He said the upper end of the capital city’s market is not seeing as much activity, demand and value growth as the low end of the market right now.
“However, good quality, high end, central Wellington properties attract high interest when they come onto the market, because there isn’t many of them available, and they sell quickly.

“We continue to see potential buyers who have missed out on multiple properties, becoming frustrated which can then fuel the market, as these buyers can resort to desperate measures and high offers to secure a property.”

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