First home buyers snap up outer city properties
New Zealand’s property market remains quiet, although first home buyers remain very busy, particularly on the outskirts of New Zealand’s main centres.
Tauranga home values rose 6.3 per cent year on year and by 1.5 per cent over the past three months. The average value in the city is $743,978.
Western Bay of Plenty market rose 8.9 per cent year on year and by 5.0 per cent over the past three months. The average value in the district is now $679,914.
QV Tauranga Property Consultant Alecia Dalzell says low interest rates are driving an increase in market activity at this time of year, especially in the first home buyer market and for properties which are priced at the right level.
“New home building companies are reporting that steady demand remains for sections with back up offers on well-located properties.”
The wider Wellington region is a great example of this, where many outer city suburbs continue to attract high numbers of first home buyers.
According to recent Corelogic Buyer Classification data, more than half of all buyers in many outer city Wellington suburbs are first home buyers.
This section of the market continues to benefit from the low interest rate environment as well as less buyer competition.
Despite this trend, overall the New Zealand property market remains quiet with value growth continuing to slow.
The rate of annual growth nationally dropped from 5.7 per cent in June 2018 to two per cent at the same time this year. The rate of quarterly value growth, nationally, has dropped to 0.1 per cent.
Meanwhile, residential property value growth across the Auckland Region decreased by 2.7 per cent year on year and by 1.2 per cent over the past quarter. The average value for the Auckland Region is now $1,027,113.
QV General Manager David Nagel says as anticipated at this time of year, there is a lack of real impetus in the market.
“Demand remains steady and listings relatively low, resulting in stable market conditions but subdued value growth. We anticipate this will continue over the coming months, with supply remaining fairly constrained and demand either staying flat or dropping slightly in many areas.
“At the same time, there is still plenty of life left in the market. The Western Bay of Plenty region, for example, has seen strong quarterly growth of five per cent with a relatively high average value $679,914. We’ve also seen many lower North Island regions, such as the Horowhenua and Manawatu, also experience strong value growth over the past three months.”
David says with affordability continuing to be a major constraint, location is becoming increasingly relevant.
“It’s the outskirts of city centres that continue to see plenty of activity, particularly from first home buyers. The wider Wellington region is a great example of this with areas like the Hutt Valley continuing to attract young families and professionals looking to take their first step on the property ladder.
“In fact, according to recent Corelogic Buyer Classification data, over half of all buyers in some outer city Wellington suburbs are first home buyers. This section of the market continues to benefit from the low interest rate environment as well as less competition during the quieter winter period.
“Affordability constraints is also impacting on the type of properties selling. We continue to see new townhouses sell well, particularly in Wellington, as they provide a more affordable solution than stand-alone properties.”
“With the Healthy Homes Bill having taken effect this week, we’ll be closely monitoring the impact this has on the investment market and on rents. At this stage, we have observed no major impact on the investment market although we may well see some upward pressure on rents, as landlords face up to the increased costs of keeping their properties insulated to the required standards.”