|Kiwi Homes Rise in Value
The average value of New Zealand homes has passed $1 million for the first time in history. Prices jumped by $50,000 in the last three months alone, with some regions up 10% for the quarter and much of the nation above 5%. While tighter credit conditions and COVID-19 have had an effect, ongoing lack of supply has helped homes to surge past this huge milestone. With the typical household balance sheet firmly concentrated in
housing, and interest rate rises on the horizon, the Reserve Bank is reminding people to diversify.
According to figures released from Quotable
Value (QV), the average New Zealand home is now worth $1,002,153. This figure,
from the end of October, jumped a little over $50,000 from $952,078 recorded at
the end of July. This 5.3% jump in value occurred during the latest COVID-19
outbreak, with government moves to dampen the market not exactly going as
planned. While a lack of credit is putting downward pressure on the market, and
supply is on the way up in some centres, conditions remain tight in key
As always, price growth was far from even
across the country. In percentage terms, the biggest increase over the last
quarter was in Christchurch at 10%, followed by Queenstown-Lakes at 9.6%,
Tauranga at 6.6%, and both Hastings and New Plymoth at 6.5%. In terms of dollar
value, Queenstown-Lakes is leading the way at $1,572,535, followed by Auckland
at $1,427,896, Tauranga at $1,114,616, and the Wellington Region at $1,068,669.
With four centres now recording values over $1 million, the market is far from
According to QV General Manager David
Nagel, "There's certainly still buyers out there who are keen to commit to
property transactions despite ongoing uncertainty around COVID-19 and the
impacts this is likely to have on the economic recovery... Credit availability
continues to tighten as banks respond to Reserve Bank concerns around property
market stability, particularly with interest rates on the rise. But a continued
lack of supply has resulted in a resurgence in prices across all 16 metro
locations we monitor."
The rise in prices has been somewhat
surprising, especially in the midst of a global pandemic. In fact, the biggest
gain in property values occurred in Queenstown-Lakes, which is one of the worst
affected areas economically in the latest outbreak. There has been a complete
lack of international tourists visiting the region over the last 18 months, but
demand for housing has remained extremely high. In Queenstown-Lakes, the
average dwelling value increased by $137,397 over the quarter.
Lack of housing supply is an obvious reason
for this rise in value, but in some places, supply finally caught up with
demand in 2021. According to the latest figures from Statistics NZ, 4483 new
dwellings were consented in September, which is 24.4% higher than the year
before. Supply rates were far from even across the country, however, with
Auckland dominating the numbers with 42% of all consents. While the number of
consents is in double digits in all regions except Tasman, Nelson, and
Marlborough, due to existing momentum, it is taking longer than expected for
the market to adjust.