Housing market remains red-hot following new housing package

by Roxanne Libatique11 May 2021

The New Zealand housing market remained red-hot in April despite the introduction of the new housing package, according to Quotable Value New Zealand (QV).

In March, the government introduced a new housing package to make the housing market sustainable and support first-home buyers (FHBs) into homeownership by increasing housing supply and removing incentives for speculators.

However, the latest QV House Price Index showed that the market still hit a new record in April, with the average value increasing by 8.9% to $913,209 nationally over the past three months – up from the 7.8% quarterly growth in March. The increase in average value represents an increase of 21.4% year-on-year, up from 18.2% last month.

QV general manager David Nagel said investors retreated from the market temporarily as they assess how the new housing package will affect them. He also noticed a decrease in FHBs' presence in the market.

While fewer properties might be selling under the hammer, the majority are still being sold at prices that are at least as strong as before the tax announcements in March, Nagel clarified.

Of the 16 major urban centres, all except Napier City and Queenstown Lakes District showed an increase in quarterly growth compared to last month. However, Napier is still showing the strongest gains in value, followed closely by Hastings, with 14.2% and 14% value growth, respectively, over the past three months.

“We're starting to see some interesting regional trends emerging, with the strongest value growth occurring in the southernmost regions of the North Island,” Nagel said.

“The Hawke's Bay region, Manawatu-Wanganui, and also the greater Wellington region are all showing very strong month-on-month value growth, with Hawke's Bay leading the pack at 4.9% monthly growth. The two southern regions of Otago and Southland are showing much more conservative monthly growth of just 2.1% and 2.5%, respectively.”

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In Auckland, house prices increased by an average of 8.2% this quarter, up from the 7.2% value growth that QV reported last month – with the average house price now at $1,306,913.

In Northland, Whangarei's residential property market was even hotter in April than it was in the previous month, with the average house price rising by 3.8% to $717,574, 10.4% higher than it was three months ago and 23.4% higher than at the same time last year. Meanwhile, house prices in the Far North district increased by 8.1% this quarter (up from the 7% that QV reported last month) and 17.2% over the last 12 months.

Tauranga remained one of New Zealand's leading cities for rapid property market growth despite some forecasts that it was slowing. According to QV, the average house price in Tauranga was rapidly closing in on $1 million – reflecting the 7.8% growth for the quarter, including 3% in April.

In Waikato, the average price of a home was $792,772 – 22.7% higher than at the same time last year. The region's house values increased by an average of 8% this quarter, only slightly higher than the 7.7% reported last month.

In Rotorua, the average price for a home was $663,642, which was 17.5% higher than it was at the same time last year. It was also 6.5% higher than it was three months ago. Meanwhile, residential property prices increased by an average of 3.2% in April, up from 0.9% in the previous month.

In Taranaki, the residential property market remained red-hot in New Plymouth last month, with the average house price increasing by 9% for the quarter and 23.3% over the past 12 months to $636,439. Meanwhile, house prices in Stratford ($445,605) and South Taranaki ($398,793) became even more buoyant, increasing by 24.3% and 33.2%, respectively, over the past 12 months.

Hawke's Bay reported the hottest housing market in New Zealand this quarter, with house prices in Napier ($798,568) and Hastings ($797,034) surging by 14.2% and 14%, respectively.

Palmerston North's residential property market showed no signs of slowing, with the average house price rising by 10.9% this quarter to $687,537.

In Wellington, the average house price across the metropolitan area increased by 4.3% in April, 10.3% for the quarter, and 28.5% over the last 12 months.

Nelson's residential property market also experienced a busy quarter, with the average house price rising by 6.3% to $765,247.

In Canterbury and Christchurch, house prices continued to rise rapidly, with the average price rising this quarter by 8.9% and 9.5%, respectively. The average price of a home in the region is $594,279; in Christchurch, that figure is $624,285.

Dunedin's residential property market also showed no signs of slowing down, with property prices rising by 2.5% last month, up from 1.8% in the previous month.

In Queenstown Lakes, the average house price increased by 6.1% this quarter to $1,383,181 and an 11% increase over the past 12 months.

Meanwhile, Invercargill's average house price increased by a whopping 9.2% this quarter to $436,759, up from the 6.8% value growth recorded last month.

Nagel said: “We'll all just be guessing the impacts of the recent tax changes until we get another couple of months of sales data to analyse. But there's certainly an expectation that we'll see at least a slowdown in the rate of value growth, with potentially fewer investors and maybe a few more first-home buyers entering the market over the coming months.”

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