The latest figures from the OneRoof-Valocity House Value Index has identified the suburbs that have the potential to lead the housing market rebound. Covering the year to the end of June, the research highlights the locations where house prices are on the road to recovery after more than a year of decline.
OneRoof studied property value changes in 798 suburbs with 20 or more settled sales in the last 12 months, and identified the major metro suburbs that are primed for a revival as well as the suburbs where house prices are up year-on-year and quarter-on-quarter.
OneRoof editor Owen Vaughan says the research should provide buyers and sellers with a roadmap for the second half of the year and help them make decisions as to where property values are likely to grow.
“The OneRoof analysis found 107 suburbs in Auckland, Christchurch, Dunedin and Wellington where property values are in a prime position for growth over the next six months. Almost half the suburbs on the list recorded quarter-on-quarter value growth, with 17 of them enjoying value growth of more than one percent,” he says.
The strongest rises were in Christchurch and Dunedin, with the three best-performing metro suburbs in the last three months:
-Bromley, Christchurch, up 3 percent to $515,000;
-Aranui, Christchurch, up 2.6 percent to $466,000; and
-Waikouaiti, Dunedin, up 2.1 percent to $527,000.
“Most of the metro growth suburbs had an average property value of less than $1 million, a strong indication that first-home buyers will be driving much of the revival, although the rebound in prices in several wealthy suburbs suggests the top end of the housing market is in the mood to buy again,” says Vaughan.
The research also identified 69 suburbs where the rate of value decline had slowed significantly over the last six months. Many of the biggest turnarounds were in Wellington and Auckland, both of which have been hit hardest by the slump.
Primed to record growth in the second half of the year are some of the country’s most popular and prized suburbs, including Grey Lynn, Ponsonby and Remuera, in Auckland; and Fendalton and Merivale, in Christchurch.
“Affordable suburbs in Auckland’s south are also on the rebound list including Mangere East, Manurewa and Wiri. However, suburbs in Hamilton, Queenstown-Lakes and Tauranga remain under pressure, with the research finding no strong evidence of an immediate revival in their prices.”
The strongest rebounds were outside the country’s major metros, with 64 regional suburbs, most of which were in the South Island, Taranaki and Northland, recording value growth over the last three months. The biggest value lifts were in Woodville, Eketahuna, Pahiatua and Dannevirke. The four suburbs all have an average property value of less than $500,000 – a likely contributing factor to the 10 percent plus lift in values over the last three months.
“There are 23 suburbs that are up year-on-year, including Reefton and Westport, on the West Coast. The one standout higher value suburb was Russell, in Northland, which has an average property value of $1.614 million,” says Vaughan.
The figures show minimal changes in the overall housing market, with the nationwide average property value down 2.1 percent in the three months to the end of June and down 11.1 percent year-on-year to $944,000.
Of the country’s 17 regions, only West Coast, Taranaki and Southland were up over the quarter, with Otago slipping into negative territory after Queenstown-Lakes’ strong growth spurt came to an end. Seven regions were down more than 2 percent over the quarter, with Hawke’s Bay, Waikato and Gisborne having the biggest drops.
“Continued drops in new listings volumes, at a time when the market was bottoming out, should be a concern for buyers who held off purchase decisions in the hope of further price drops,” says Vaughan.
Total listings for June were up 6.5 percent year-on-year nationwide but new listings were down almost 10 percent over the same period. New listings are down year-on-year in all but four regions, with the biggest shortages in cyclone-hit Gisborne and Hawke’s Bay, down 62 percent and 24 percent respectively. New listings are down 21 percent year-on-year in Wellington and 17 percent in Auckland.
“We are increasingly hearing from agents that have the buyers, but the stock just isn’t there. Auctions are also starting to become more competitive. Tightness in listing volumes will tilt the market in favour of sellers in many locations.”
Wayne Shum, senior researcher at OneRoof’s data partner, Valocity, said the Reserve Bank’s signal in May that the cash rate had peaked at 5.5 percent would provide certainty to the market.
“The slip into recession would suggest the Reserve Bank’s action to bring down inflation has worked although we won’t know for sure how successful the aggressive lifts in rates have been until the latest CPI figures come out later this month,” Shum says.
Shum says supporting factors for a revival in the market included rise in net migration and the expected pressure on rents, and warns the market isn’t out of the woods just yet.
“There is still mortgage pain to come for existing borrowers – at the end of the first quarter of this year the effective interest rate was 4.7 percent and with it now sitting around the 6 percent mark, further rises are forecast by the fourth quarter. Homeowners are unlikely to be making additional purchases and instead may focus on paying down debt. Mortgage arrears rose over the past quarter. However, they remain below the months immediately post-Covid lockdown, and the aftermath of the GFC,” says Shum