New Zealand’s property market continues to show an uneven recovery with luxury areas breaking price records while other regionss struggle against a cocktail of economic malaise and mortgage costs.
The bellwether of the Kiwi real estate scene is Auckland, and it’s experiencing fluctuating fortunes.
Auckland owners will be happy the cost of an average dwelling remains $8,000 above the bottom of the slump in June of last year. The average price remains strong at $1,287 million, according to the latest OneRoof House Price Report.
But in a sign of the market’s continuing ebb and flow, Auckland prices dropped 2.4% for the three months to August. The city still commands prices 0.2% above the levels of 12 months ago.
Wellington’s experience is similar to Auckland’s. Its average property value is up 2.4% on 12 months ago, but it hit the rocks in the three months to August, falling 2.5%. That was the largest three-month fall of any region surveyed by OneRoof.
A small fall of -0.9% was recorded for Christchurch, indicating some stability in the Garden City.
One region keeps powering on regardless of the economic signals. The luxury area of Queenstown-Lakes has achieved an average price of more than $2 million – an all-time record.
Overall, OneRoof reports that New Zealand’s average property value dropped 1.5% to $962,000 in the three months to August.
The report, scanning 835 suburbs with 20-plus settled sales in the last 12 months, found the biggest lift in values in the Canterbury suburbs of Netherby (+12.4%), Allenton (+9.1%), Kaikoura (+8.2%), and Tinwald (+7.6%).
So, what’s the reason for the current market behaviour, which favours the buyer in many areas?
Our agents are convinced the most significant influencing factors are the continuation of 7%-plus interest rates, despite a recent -0.25% cut in the Official Cash Rate (OCR) by the Reserve Bank of New Zealand.
The withdrawal in May of the First Home Grant for first-time buyers has reduced entry-level buying, a foundation of a healthy market. And the third factor is rising unemployment, which undermines confidence in the immediate future.