I talked to Miriam Bell, senior business journalist at stuff.co.nz about house prices.
Data hard to pin?
Any data comparing periods is really hard to gauge, especially with different lockdown in different regions and waves of demand from previous periods.
Out of Auckland
For investors looking for cashflow, looking further afield has been popular. So i asked Miriam about any trends.
“Well, yeah, it’s interesting because there does seem to be quite a lot of volatility, monthly volatility particularly, and sort of quite sharp reversals and turns and stuff. And the data that comes through, CoreLogic’s house price index data was out yesterday and that shows, for example with Rotorua, that values were up by 1.9% in September, but that was after being down 0.9% in August. And so that means that over the quarter, prices are down by 2.4% in Rotorua. Which, you know, given it was quite a boom sort of place for a while.”
But looking at Tauranga?
“has been having a very solid period of time as it happens. It’s had the highest quarterly rate of all the main centers over the quarter at 7%, and that’s left it with an average value of just over a million. It’s a strong performer currently.”
What is Auckland doing?
It’s growth rate has dropped off, it’s average value is now 1.3 million, according to CoreLogic, which is pretty scary. But it’s quarterly rate dropped to 4.9% in September, but that was from 5.7% in August. So that’s quite a slowing sort of pace. I mean, you might expect that given the lockdown, but at the same time, you know, all these areas are still struggling with a very limited supply of new, well, stock coming onto the market for sale.
Future
There seems to be opposing forces coming in to play which could mean certain types of property experience a slow down.
Immigration policy changes means a large number of first home buyers could be able to get funding next year. More than 100,000 people are suddenly in line to become permanent residents. The banks generally only lend to immigrants who have a permanent residence visa. At a guess, $800k to $1.2 million buying band will have a lot more demand in Auckland.
Counter to this is tightening of lending criteria due to multiple reasons, CCCFA, RBNZ macro prudential rules, new tax laws for property investors. Interest rates heading up during a time that many businesses already feel lockdown pressure should inhibit demand.
On the supply side there are big changes afoot, however this may take longer to materialize with constraints on building materials and labour.
