Quarterly Property Market & Economic Update - New Zealand | COVID-19 special edition - CoreLogic
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Quarterly Property Market & Economic Update New Zealand | COVID-19 special edition Quarter 2, 2020
Table of Contents
About CoreLogic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Macro Economic and Demographic Indicators. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
New Zealand Asset Classes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
New Zealand and Australia GDP Growth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
New Zealand Population and Migration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Regional Building Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Consumer Confidence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Housing Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Early Property Market Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Listings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Lending conditions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Sales Volumes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Nationwide Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
House Price Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Buyer Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Main Cities Housing Market Indicators. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Auckland Market Activity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Auckland Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Current Auckland Suburb Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Hamilton Market Activity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Hamilton Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Tauranga Market Activity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Tauranga Values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Wellington Market Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Wellington Values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Christchurch Market Activity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Greater Christchurch Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Dunedin Market Activity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Dunedin Values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
CoreLogic Data and Analytics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Legal Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
2
About CoreLogic
CoreLogic is a leading property information, analytics and Contact
services provider in the United States, Australia and New Zealand.
Call us 0800 355 355
CoreLogic helps clients identify and manage growth opportunities,
improve performance and mitigate risk, by providing clients with Wellington office
innovative, technology-based services and access to rich data Level 2, 275 Cuba Street
and analytics. PO Box 4072
Wellington 6140
Whilst all reasonable effort is made to ensure the information in this
publication is current, CoreLogic does not warrant the accuracy, Auckland office
currency or completeness of the data and commentary contained in Level 5
this publication and to the full extent not prohibited by law excludes 41 Shortland Street
all loss or damage arising in connection with the data and Auckland 1010
commentary contained in this publication. Email: reports@corelogic.co.nz
corelogic.co.nz 3
Executive Summary
COVID-19 special edition
It’s obviously been an unprecedented year for the to undermine the property market. At the same
economy and property market so far in 2020, and time, the normal seasonal rise in listings will be
unfortunately we’re not out of the woods yet. Even upon us at that time too, which will be a test for
so, we’ve been wary of some of the doom and gloom the strength of demand. And in addition, mortgage
out there, because there are factors that could see a payment deferrals could potentially have more or
brighter property market outlook than some expect less ended by then as well. September’s General
– e.g. look at the large inflows of kiwis returning Election is another potential driver of property
home to live, potentially with equity to put to work market uncertainty.
in the housing market (but even if they go renting,
that’s still extra housing demand). Similarly, housing In terms of the recent buyer mix, first home buyers
affordability looks more favourable than it did when have remained a solid presence in the market, but
we entered the GFC, thanks to higher household the more significant shifts in market share have
incomes and very low mortgage rates this come from investors, both mortgaged and cash.
time around. To be fair, some of that rise in percentage market
share (especially for cash investors) has been
That said, there’s no denying that the economic because of sharper falls in the number of purchases
outlook remains weak. GDP is set to fall by 6-7% by other groups, who have had to meet higher
this year and unemployment is expected to peak at standards to secure a mortgage (which isn’t an issue
close to 10% - a level not seen since the early 1990s. for cash buyers). However, there is also likely to have
Meanwhile, the extra government debt that’s been been some genuine ‘bargain hunting’ by investors,
incurred in recent months could prove to be a long which has helped their market share to hold up.
term restraint on the economy, as we potentially One factor that will have reassured some investors
face higher taxes to keep the debt servicing in check. in traditional long-term rental properties is that the
feared flood of short-term Airbnb-type holiday lets
But as noted, it’s not all doom and gloom. For onto the market (as tourism flows collapsed) hasn’t
example, the NZ Activity Index recently developed happened to any great degree so far.
by the Reserve Bank, Treasury, and Statistics NZ
showed that economic activity in June weighted Overall, property sales volumes could only be
across a range of measures was only 1% below a about 70,000 this year, roughly 20% below 2019’s
year ago (despite no international tourism). That level. However, in terms of prices, we suspect that
return to ‘normality’ has also been seen in the any falls will be smaller than in the Global Financial
housing market, with agent appraisals, banks’ Crisis (GFC), when the national average fell by 10%.
valuations ordering activity, new listings (both After all, we entered this episode with mortgage
for rent and sale), mortgage lending, and property rates much lower and affordability looking better
sales all improving and holding at seasonally than in 2007-08, banks in a stronger position to
normal levels recently. continue lending, and generally speaking more
households with more equity in their homes (due
What’s more, given that we entered lockdown to the previous loan to value ratio speed limits).
with a low number of total listings available on the This means that the risks of negative equity are
market, the return of buyers as we subsequently reduced. Our projection is that average values might
moved down the alert levels has seen the supply/ fall by 5-7% in this downturn, which is obviously not
demand balance remain relatively tight, in turn welcome for property owners, but a benefit to
supporting property prices. That said, there were would-be buyers.
nevertheless emerging signs of weakness in our
preliminary quarterly house price index for Q2, and As always, we keep a running monitor on the
given the downside risks to the economy, it wouldn’t property market every week via our NZ Property
be a surprise to see clearer evidence of house Market Pulse articles, so be sure to check these out
price falls later in 2020. on our website http://www.corelogic.co.nz/
news-research/all-news/. Our podcast is also a
Indeed, the wage subsidy is now scheduled to end great source of data and commentary: https://
on 1st September and that seems likely to drive a corelogicnzpropertymarket.buzzsprout.com/.
‘second round’ of job losses, which in turn will tend
4 4
Macro Economic and
Demographic Indicators
5
New Zealand Asset Classes
RESIDENTIAL REAL ESTATE
$1.22 trillion
$284 billion in home loans
COMMERCIAL/INDUSTRIAL REAL ESTATE
$227 billion
NZ LISTED STOCKS
$165 billion
NZ SUPER & KIWISAVER
$109 billion
The value of residential property across the country eroded slightly in Q2, totalling $1.22 trillion, with
mortgages secured against 23% of this value. In other words, 77% of the value of the property market
is household equity. However, it’s also important to note that household debt is high relative to income,
and to some extent the debt has only been sustainable in recent years because of low mortgage rates.
The period from April to June was clearly a unique time for the world and financial markets, and the value
of shares and pooled investment funds dropped early on. However, more recently, sharemarkets have
rebounded and the value of the NZX is now pretty much back to where it was in late March (pre-lockdown).
6 Sources: CoreLogic NZ, Reserve Bank of NZ, NZX, NZ Super Fund 6
New Zealand and Australia GDP growth
Annual Average GDP Growth (%)
8
New Zealand
7 Australia
6
5
4
3
2
1
0
-1
-2
-3
1990 1994 1998 2002 2006 2010 2014 2018
Annual Change in New Zealand Activity Index and GDP (%)
10%
5%
0%
NZ Activity Index
-5%
GDP (annual average)
-10%
-15%
-20%
2004 2008 2012 2016 2020
New Zealand’s GDP dropped by 1.6% in Q1 2020, the largest decline in 29 years. COVID-related travel restrictions made
a significant contribution to the drop in economic activity in Q1, although continued drought in some parts of the
country was a factor too.
Given lockdown for most of April and restricted activity in May too, Q2’s GDP figures (released mid-September) will
also show a fall – meaning that we are currently in a recession. Indeed, the freshly-released New Zealand Activity
Index (NZAC) indicated that activity was down by 19% year-on-year in April and by 6% in May (albeit only by 1% in June).
Government support such as the wage subsidy will have limited the extent of recession so far, but was never going to
prevent it altogether.
Ultimately, GDP is anticipated to fall by 6-7% this year, and the size of the economy will be restricted for some time to
come by the absence of international tourists.
Source: Reserve Bank of New Zealand, Statistics NZ 7
NZ Population and Migration
Quarterly Change in National Population Change Composition
Population (persons per quarter) (persons per quarter)
40000 35000
Quarterly population change
35000 30000 Natural increase
4 quarter moving average
Net migration
30000 25000
25000 20000
20000 15000
10000
15000
5000
10000
0
5000
-5000
0
1991 2000 2009 2018 -10000
1996 2005 2014
Annual Change in Population (persons)
76,000
24,400
5,300 3,900 3,600
1,400 1,200
New Zealand Auckland Christchurch Tauranga Hamilton Wellington Dunedin
National population growth accelerated in the first quarter of 2020, rising from an annual rate of 1.7% in Q4
2019 to 2.0% – the highest since Q4 2016. This meant that our population has now surpassed the 5m mark.
As ever, the natural rate of increase (births minus deaths) remains pretty steady, leaving migration as the
most important driver of upswings and downswings in overall population change (and hence property
demand). Indeed, net migration has increased in recent months as many non-citizens who might otherwise
have left NZ have had to stay instead. At the same time, more kiwis have been staying home instead of
making a move overseas, and there’s also been an influx of kiwis returning back from overseas.
Early in lockdown, it was assumed by some commentators that net migration would drop off sharply in the
coming months and remove a key support for the property market. However, with as many as 1m kiwis living
overseas, these ‘returners’ to NZ could prop up our overall net migration balance for some time to come, and
in turn bolster property demand, whether that be for owner-occupation or renting.
8 Sources: Statistics New ZealandLong term migration (12-month rolling totals)
200,000
Net
Arrivals
Departures
150,000
100,000
50,000
0
-50,000
2002 2006 2010 2014 2018
Comparison of old and new net migration series (12-month rolling totals)
100,000
Old method
80,000 New method
60,000
40,000
20,000
0
-20,000
-40,000
2002 2006 2010 2014 2018
Source: Statistics New Zealand 9Regional Building Consents
New dwelling consents trend The construction sector has taken a significant hit from
(consents per month) COVID-19, with many projects being put on hold over
lockdown and some of the larger firms already laying
1,600
Auckland Region off staff. Indeed, the number of new residential dwelling
1,400 Waikato Region
Wellington Region consents issued in March was down by 8% compared
1,200 Canterbury Region
Rest of NI
to a year earlier, followed by a 17% drop in April. May’s
1,000
Rest of SI figure was an improvement, but the annual decline still
came in at 5%. We’ve clearly now passed the peak for
800
consents in this cycle (annual total of 37,882 in the
600
February 2020 year), but given the very high starting
400 point, it’ll be a long time before the falls return the
200 number of consents to ‘normal’.
0
1995 1999 2003 2007 2011 2015 2019
Indeed, the large upswing in dwelling consents seen
prior to COVID-19 means that builders still have a solid
Sources: Statistics New Zealand pipeline of work for a number of months yet, potentially
carrying them through into 2021. However, as the recession bites and unemployment rises, fewer households
will have the confidence or ability to build a new home, so next year could be much more sluggish for
builders. Any tightening by the banks in terms of finance for construction would be an added pressure.
Longer term, however, our population is likely to continue to grow steadily and the existing shortages
of affordable property in some parts of the country will still need to be remedied too. A key trend prior to
lockdown was the construction of smaller dwellings, such as townhouses and apartments, and this is likely
to remain a feature post-lockdown too, as a more intensified housing stock becomes more important.
Meanwhile, alterations & additions activity has also been high in recent years (also helping to improve
the quality of our housing stock), but will now probably ease down too, as household finances come under
more pressure.
Consumer Confidence
ANZ-Roy Morgan Consumer The latest ANZ Roy Morgan measure showed that, after
Confidence (index, monthly) sharp falls in March and April, consumer confidence
160 started to rebound in both May and June. The latest
reading of 104 in June (seasonally adjusted) was back
140
up to March’s levels, but still below the norm of around
120
120 in late 2019 and early 2020, as well as the long term
100 average (119). In other words, confidence amongst
80 households has rebounded from the worst point of alert
level four lockdown, but there’s still significant caution
60
out there – understandable when jobs are being lost and
40
the wage subsidy will end on 1st September. In turn, this
20 caution will also keep a restraint on the housing market.
0
2004 2007 2010 2013 2016 2019 Meanwhile, a similar story has applied to business
confidence – a sharp drop in and around full lockdown,
and then a gradual recovery over May and June, but not
back to the levels that prevailed pre-lockdown. A key
indicator to watch for business confidence is firms’
employment intentions, and unfortunately these
10 Sources: ANZ, Roy Morgan continue to point to further job cuts ahead.Employment
Annual change in employment, Labour force participation rate (%)
full time and part time
72
10%
8% 70
6%
68
4%
66
2%
0% 64
-2%
62
-4%
Full time 60
-6% Part time
-8% 58
1987 1998 2009 2020 1986 1990 1994 1998 2002 2006 2010 2014 2018
Unemployment Rate (%) Number of Jobseeker Support claimants
12
240,000
10
220,000
8
200,000
6 180,000
160,000
4
140,000
2
120,000
0 100,000
1986 1990 1994 1998 2002 2006 2010 2014 2018 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20
In the first three months of the year, employment continued to grow, with full-time up by 0.3% in the quarter (1.8%
annually) and part-time rising by 1.2% (albeit still down by 0.9% annually). Overall employment on the trend series stood
at 2.66m in Q1, about 1.3% higher than a year earlier (or 33,000 employees). Meanwhile, the labour force participation
rate remained above 70% (i.e. seven in every ten working age people were either employed or looking for work) and the
unemployment rate continued to hover at a low 4% or thereabouts. In other words, prior to lockdown, the labour
market was still strong.
Of course, since the end of March, everything has changed and timelier indicators show that the labour market is now
weakening. Stats NZ’s monthly series on filled jobs showed a drop of 1.6% in April, which was only partially reversed by
May’s 0.8% increase. Meanwhile, the Ministry of Social Development’s figures on Jobseeker Support claimants show a
rise of more than 50,000 since the end of March, and implies an increase in the unemployment rate already from about
4% to as high as 6%. The ending of the wage subsidy on 1st September will unfortunately see more jobs lost, and most
expectations are that the unemployment rate will peak towards 10% later in 2020. This clearly highlights downside risks
to property sales volumes and prices.
Source: Statistics NZ, Ministry of Social Development 11Interest Rates
Mortgage Interest Rates (%) The Reserve Bank (RBNZ) had already
cut the official cash rate (OCR) to 0.25%
25 Floating mortgage interest rates prior to alert level four lockdown, but since
then has commenced its large-scale asset
20 purchase programme (quantitative
easing), delayed the extra bank capital
requirements for at least a year, and
15
removed the loan to value ratio (LVR)
speed limits for at least a year too. It
10 has also asked the banks to assess their
readiness for a negative OCR, with a view to
potentially implementing that early in 2021
5
(although retail lending and deposit rates
would stay positive).
0
1965 1971 1977 1983 1989 1995 2001 2007 2013 2019 In other words, the RBNZ has taken
significant action to try and avert the
Official Cash Rate and Mortgage Rates (%) worst effects of the COVID-19 pandemic
12 and economic recession, and to date this
has been successful in keeping market
10 interest rates low – indeed, mortgage rates
have generally fallen to less than 3% across
OCR history
OCR projection all fixed terms. Clearly, this has benefitted
8
mortgage borrowers, alongside the help
they’ve been able to access via shifts to
6
interest-only loans, extensions to mortgage
lengths, and payment deferrals. At least
4
$40bn of existing mortgage debt has had
some form of relief in recent months,
2
equivalent to about 15% of the stock
of loans.
0
2000 2009 2018 Overall, mortgage interest rates are set
to stay ultra-low for some time to come,
Average Two Year Fixed Rates (%) and may not actually have reached a floor
just yet.
5 .2%
5 .0%
4 .8%
4 .6%
4 .4%
4 .2%
4 .0%
3 .8%
3 .6%
3 .4%
2018 2019 2020
12 Sources: Reserve Bank of New Zealand and interest.co.nzHousing Overview
13Early Property Market Indicators
Property Guru survey – most common reason for listing (% of respondents)
24% Downsizing
19% Financial distress
16% Fearing price falls
16% Upsize/lifestyle
14% Other (e.g. job relocation)
10% Selling a vacant rental
During alert level four lockdown, measures relating
to the early stages of a sale process – i.e. pre-listing
(such as appraisals generated by real estate agents) and
pre-mortgage (valuations ordered by banks) – fell away
sharply, which was no surprise. However, as our Early
Market Indicators Report shows, they then bounced
back steadily, and have recently been running at
around normal levels: https://www.corelogic.co.nz/
early-market-indicators
However, a survey we recently launched of Property Guru
users was less reassuring, as it showed some vendors
bringing property to the market for the ‘wrong’ reasons,
such as financial distress (either now or potentially in the
short term) or fears about future price falls. The reasons
why a listing has been made will be a key factor to keep
an eye on as we move through the rest of the year.
14Listings
Total listings (Three-week rolling total)
Rest of NZ
1,800 Auckland
1,500
1,200
900
600
300
0 Year Ago
Jul 15 Jul 16 Jul 17 Jul 18 Jul 19 Jul 20
New property listings for sale clearly fell sharply during lockdown, but like a range of other indicators they’ve now
rebounded and are similar to the same time last year, or even above in some parts of the country. The normal seasonal
lull is upon us, however, so new listings flows will now ease downwards (as they usually do) over the next 6-8 weeks, before
rising again in Spring. That increase will be a test for the strength of demand, and whether or not there are enough buyers
circling from September onwards to absorb some of that stock.
New Listings Average last 3 weeks 1 month change 1 year change
New Zealand 1,841 13% 11%
Auckland 523 25% 7%
Waikato 205 9% 7%
Bay of Plenty 143 4% 6%
Wellington 126 -5% -6%
Canterbury 293 17% 17%
Otago 121 2% 38%
15Listings
Total Listings Although new for-sale listings have
rebounded, so have actual sales of
property, which means that the total
35,000 Auckland (RHS) stock of listings available on the market
Rest of NZ 10,000 remains pretty low in most parts of the
30,000 country. Auckland has dropped steadily
8,000 over the past year, while Bay of Plenty
25,000
and Wellington have also experienced
20,000 6,000 annual declines in the stock of total
listings. Waikato and Canterbury have
15,000 been flat (at low levels), while it’s only
4,000
Otago that’s really seen any meaningful
10,000
rise in total listings lately. But even
2,000 there, although the rise has been strong
5,000
(33%), that again was from a low base.
0 Y ear
Ye ar Ago
Ag o 0
Overall, the market is now likely to
Jul 15 Jul 16 Jul 17 Jul 18 Jul 19 Jul 20
remain tight in terms of stock on
the market until at least Spring.
New Listings Latest week 1 month change 1 year change
New Zealand 26,279 -1% -5%
Auckland 7,922 1% -17%
Waikato 3,123 0% 0%
Bay of Plenty 1,894 -3% -7%
Wellington 1,118 -13% -9%
Canterbury 4,271 0% 0%
Otago 1,495 0% 33%
Weekly flow of new for-rent listings
4,000
Meanwhile, the early fears in lockdown
2020 that Airbnb-type properties would be
3,500 2019 switched out of the holiday let sector
2018
and into the traditional long-term
3,000
rental market (hence raising supply
2,500 and suppressing rents) don’t seem to
have been borne out so far. Indeed,
2,000 anecdotal evidence suggests that many
1,500
Airbnb hosts are happy with the level
of domestic bookings that they’ve had.
1,000 Moreover, our for-rent listings data
show that the weekly figures are
500
actually running below the 2018 and
0 2019 levels – suggesting no major
16 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 switching of Airbnb properties.Lending conditions
Annual Change in Gross New High LVR Lending to Owners and
Lending Flows ($m per month) Investors (% of new lending)
1,500 25%
Owner occupier lending > 80% LVR
1,000 Investor lending > 70% LVR
500 20%
Previous owner occupier speed limit(20%)
0
-500 15%
-1,000
-1,500 Investor 10%
Owner-occupier
-2,000
-2,500
5%
Previous investor speed limit(5%)
-3,000
2016 2017 2018 2019 2020
0%
Refinancing Profile for Mortgages 2017 2018 2019 2020
(% of stock) The last few months have clearly been a volatile
40% period for mortgage lenders, with most having no
choice early in lockdown but to handle queries only
35% Owner-occupier
Investor
from their existing customers; new customers were
30% largely put on hold. Not surprisingly, then, the value of
25%
new lending in April was only $2.7bn, down from nearly
$5.5bn in the same month a year earlier. May’s result
20%
was stronger, but still well below the levels of a year ago
15% – $4.3bn versus $6.5bn the same month a year earlier.
Both investor and owner-occupier lending activity has
10%
fallen sharply over the past few months, as borrowers
5%
remain cautious and banks take a similar approach.
0%
Floating Fixed < 1 year Fixed > 1 year
But although new lending activity has been subdued, there have still been plenty of interesting points to note. First,
the government and banks were quick to introduce the mortgage payment deferral scheme, while banks have also shown
plenty of willingness to extend the terms of loans for people facing financial stress and/or allow them to switch to interest
only. Indeed, prior to lockdown, about 25% of lending flows were interest only, but that has quickly risen to 30% post-
lockdown. Overall, it’s been estimated that about $40bn of loans have sought some kind of payment relief in recent
months, equating to about 15% of the stock of mortgages.
Meanwhile, the Reserve Bank has also pushed out the extra capital requirements for banks (which were originally
supposed to have started on 1st July this year) for at least a year, which has effectively given banks more money to
potentially lend out over the coming months than otherwise. The Reserve Bank also put a temporary hold on the loan to
value ratio speed limits from 1st May, giving more people scope to buy a property with less than a 20% deposit. However,
the effect of this has been dampened by the banks (understandably) maintaining their own internal LVR policies pretty
close to what was previously mandated.
The Reserve Bank of course has also embarked on its large scale asset purchase programme, or quantitative easing.
This has helped to keep money circulating around the economy and kept downwards pressure on mortgage rates.
Overall, there are clearly challenges ahead for mortgage lending, with question marks around banks’ willingness to lend
and also borrowers’ desire to take on debt. The end of the wage subsidy on 1st September is a key date for the economy
and further rises in unemployment thereafter would tend to dampen the mortgage market, given banks’ focus on
borrowers’ job security and ability to keep servicing the debt.
17
Sources: Reserve Bank of New ZealandSales Volumes
Nationwide Sales Volumes Nationwide Annual Change
(monthly total) in Sales Volumes (%)
12,000
11,000 40%
10,000
9,000 20%
8,000
7,000 0%
6,000
-20%
5,000
4,000 -40%
3,000
2,000 -60%
1,000
-80%
2011 2014 2017 2020 1996 1999 2002 2005 2008 2011 2014 2017 2020
Regional Sales Volumes
(year-on-year % change)
0% -37 .3% -32 .4% -47 .8% -45 .8% -37 .3% -30 .6% -36 .7%
-5%
-10%
-15%
-20%
-25%
-30%
-35%
-40%
-45%
-50%
Needless to say, the past few months have been a severely distorted period for property sales activity, with
no settlements involving the physical movement of people allowed for most of April. Even as we moved into
alert level three, it still wasn’t ‘normal’ to get a property sale done.
In terms of the actual numbers, sales dropped by about 80% annually in April and by around 40% in May.
June’s result was much better – a rise of 11% – but this is likely to have been driven partly by a shift of sales
into June that otherwise would have happened in April or May. That said, genuine new demand does seem to
have emerged after lockdown, and the rebound has if anything been better than might have been expected.
At a more detailed level, the decline in sales activity over the June quarter as a whole was at least 30% (from
the previous year) in each of the main centres, with Hamilton and Tauranga the softest in terms of market
activity levels. Of course, with the supply of listings low around most parts of the country, the drop in
achieved sales is not entirely due to sluggish demand – sometimes it’s due to a lack of choice for buyers.
Again, Spring is looming as a key period for property sales activity, with mortgage payment deferrals winding
down, the wage subsidy ending, and the General Election also potentially weighing on confidence.
18 Source: CoreLogicNationwide Values
Average Value of Housing Stock - New Zealand ($)
$738,018
Annual and Quarterly Change in Value (%)
$9,742 1 .3%
$50,997 7 .4%
$220,139 43%
In the year to June, national average property values rose by 7.4% on our monthly index. But a more informative
comparison in the current environment is either the three month change and/or one month change, with values up
by 1.3% since March, but down by 0.2% from May to June. This is early evidence of a COVID effect on property prices.
In addition, an alternative index we look at is our quarterly measure, which is based on sales agreements across the
whole of each respective quarter. It showed that the national average dropped by 1.5% in Q2 (on a preliminary basis),
with falls of more than 2% in Auckland and Dunedin.
Overall, although it’s not all one-way traffic yet (e.g. Tauranga saw values rise in Q2 on our quarterly index), the signs
seem to be emerging of a turning point for property prices. Our working assumption is that they could ultimately fall
by 5-7% nationally, which would be unwelcome for property owners, but still a smaller decline than the figure of 10%
seen during the GFC.
19House Price Index
Average Dwelling Value ($) The past three months have obviously been
a very distorted period for the property
market, and clear price trends haven’t yet
emerged – given that property sales
volumes only really seem to have
normalised towards the end of June, we
need to treat price data for April and May
with caution.
That said, the general message is that
property values have probably held up
a bit better than seemed likely during those
uncertain times of alert level four lockdown.
Our monthly index shows that average
property values nationally rose by a total
of 1.3% between March and June, albeit
they dipped by a minor 0.2% in June alone.
The first signs of a turning point for values may have started to become clearer in Dunedin (0.9% fall in June),
Wellington (-0.5%), and Auckland (-0.3%), although Tauranga and Christchurch recorded further small gains
in June.
Meanwhile, if you look at a broader measure across the whole quarter (which is our quarterly index), the signs
of a turning point look a little stronger. The national average fell by more than 1% over the quarter as a whole,
and Auckland and Dunedin saw drops of more than 2%. But to emphasise that it’s not all one-way traffic yet,
Tauranga saw a rise in Q2 of more than 1%.
Overall, then, it’s too early to be sure that property values have started a downturn – some areas are still
rising, and different measures yield slightly different results. However, with the economy in recession and
unemployment rising, the risks to property values for the rest of 2020 are more to the downside than upside.
Queenstown stands out as a clear vulnerable area, while Invercargill, for example, now has extra challenges to
face from the pending closure of the Tiwai smelter.
JUNE 2020
Current Value 1 month 3 months 12 months 5 years
New Zealand $738,018 -0.2% 1.3% 7.4% 43%
Auckland $1,082,541 -0.3% 1.5% 5.4% 29%
Hamilton $627,777 -0.2% 0.7% 7.3% 64%
Tauranga $794,189 0.2% 2.8% 6.7% 64%
Wellington $783,655 -0.5% 0.4% 10.4% 70%
Christchurch $518,369 0.2% 0.8% 3.7% 9%
Dunedin $547,531 -0.9% 1.8% 18.9% 85%
Source: CoreLogic NZ QV Monthly House Price Index
20House Price Index Annual Value Change (%) -9% 21% © 2020 Mapbox © OpenStreetMap The pockets of strength in property values (over a 12-month horizon) around the country are easy to see in Southland and Otago, and almost all of the lower and central North Island. The top half of the South Island and Auckland/Waikato/Bay of Plenty have been more subdued, but still showing gains in values. *Size of bubble represents the number of properties in the Territorial Authority 21
Three Month Value Change (%)
-2% 5%
© 2020 Mapbox © OpenStreetMap
Switching to a timelier and more relevant three-month change, the effects of COVID-19
and the recession since the end of March are easier to see in average property values
– Queenstown, the West Coast, and top of the South Island have gone flat, or are
showing falls. Emerging weakness is also becoming clearer around the East Coast
of the North Island.
22 *Size of bubble represents the number of properties in the Territorial AuthorityRent
National Annual Change in Value and Rent (%) Gross Rental Yield – National (%)
20% 5 .0%
Annual change in value
Annual change in rent 4 .5%
15%
4 .0%
10% 3 .5%
3 .0%
5%
2 .5%
0%
2 .0%
-5% 1 .5%
1 .0%
-10%
0 .5%
-15% 0 .0%
2005 2008 2011 2014 2017 2020 2004 2007 2010 2013 2016 2019
National rents averaged $445 per week in the three Dunedin has already been covered (strong rental growth),
months to June, up by 4.8% from the same quarter a year but the rest of the main centres are ticking along relatively
earlier. To date, there isn’t much evidence at the national well for now too – with rental growth in the vicinity of
level that rents have been too badly affected by COVID-19 5% in Auckland, Hamilton, Tauranga, Wellington,
and lockdown, recession etc. Indeed, as noted earlier in the and Christchurch.
report, rental listings have if anything been a little lower
than normal, underpinning the level of rents. However, if After a slow upwards trend for a number of months, gross
the GFC is anything to go by, rental growth is likely to slow rental yields have edged back down slightly in the past few
markedly over the rest of the year. months, with the national average now at 3.2%. The figures
in Christchurch (3.6%) and Dunedin (3.7%) are higher than
That steady national average masks some quite large the average, but Auckland is significantly lower (2.6%).
regional divergences, however. For example, rents in
Gisborne, Hastings, Palmerston North, Lower Hutt, and It remains unclear how yields will move from here, as the
Dunedin have all grown by more than 10% in the past year. balance of risks to both rents and property values is to the
But Waimakariri for example has seen rents fall by almost downside. Indeed, it’s possible that yields stay relatively
3% in the past year, and the effects of the closed borders unchanged over the coming months. Of course, for any
can be seen in Queenstown – rents there have dropped by investor who is seeing the value of their property drop,
about 10% over the past year, from $593 per week to $533. a stable yield might only be small consolation.
Practically all of that decline has come since March.
Average Annual
Gross Yield
Weekly Rent Change in Rent
Auckland $545 3.5% 2.6%
Hamilton $413 5.7% 3.4%
Tauranga $491 4.0% 3.2%
Wellington $543 5.6% 3.2%
Christchurch $363 2.6% 3.6%
Dunedin $388 10.9% 3.7%
Sources: CoreLogic NZ and MBIE
23Buyer Classification
Buyer Classification – NZ Property Transfers by Non-Citizens
New Zealand (% of sales) or no Resident Visa (% of total transfers)
3 .5%
Buying
30% 30% Selling
3 .0%
26% 26%
25%
23% 2 .5%
21%
20%
2 .0%
14% 1 .5%
10% 10% 1 .0%
5% 6%
4% 5% 0 .5%
4% 2%
0%
0 .0%
2005 2008 2011 2014 2017 2020 2017 2018 2019 2020
Mover Multiple Property Multiple Property Source: Statistics New Zealand
Owner Mortgage Owner Cash
First Home Buyer New to Market Other ReEntry
Broadly speaking, the trends that we’ve seen for a few quarters now remained in place in post-COVID Q2,
but there were also hints of changes in buyer behaviour.
Starting with first home buyers (FHBs), after a long upwards trend to a market share of 24% late last year, they
only accounted for 23% of purchases in the second quarter – not a large change, but still one to watch. After
all, although KiwiSaver balances (and hence FHBs deposits) have rebounded since the initial lockdown slump,
it wouldn’t be a surprise if some would-be buyers waited on the sidelines to see if prices fall, with the hope of
getting a bargain later. Anybody with uncertainty around their job situation is likely to bide their time too.
Looking at movers, the downward trend in their share of property purchases also continued in the second
quarter. At 26%, that figure is down from 29% a year ago, and also the lowest level since mid-2009. As has
been the case for some time now, we suspect that many movers are finding it difficult to raise the funds
required to trade up, either because of high prices or already-high mortgage debts. This is likely to have
played a role in the rise in dwelling consents for alterations & additions, as existing homeowners renovate
rather than relocate. However, movers’ share of purchases could still be supported over the coming months
by people who ran out of space during lockdown looking to get a larger house (provided that it can
be financed).
Turning to investors, cash buyers have continued to steadily raise their market share, helped out by their
ability to circumvent the still-cautious lending policies at the banks (which have hindered other buyer groups).
These buyers may also be sensing opportunities to snap up some ‘bargains’ in a subdued market.
Mortgaged investors have also retained a solid presence in the market since the end of March, sitting at 25%
for Q2 – anecdotal evidence strongly suggests that ‘mum and dad’ investors are much keener to put their
equity/deposit to work in the property market rather than the low returns on offer from term deposits.
More generally, it’s important to reiterate that the number of sales is relatively low at present, so this is a
caveat that needs to be kept in mind when looking at the market share figures. However, it’s not too hard to
envisage recent trends continuing – e.g. movers staying quiet as the wait out the uncertainty, FHBs potentially
also sitting on the sidelines a little, but investors looking more seriously at trying to strike a hard deal.
24Main Cities Housing
Market Indicators
25Auckland Market Activity
Buyer Classification – Auckland Generally speaking, the composition of
(% of purchases) Auckland’s property purchasers since the
end of March has been similar to the prior
few quarters, albeit with some early signs
of change.
30%
28% 26%
27% First, movers (or existing owner occupiers
27% 26%
who are relocating, e.g. downsizing,
23% upsizing) remain relatively quiet, with just
20%
23% of all purchases in Q2. That market
13% share for movers is basically as low as it’s
been since 2009 – potentially reflecting
10%
the high costs to move house at present
7% (especially in Auckland, where the value gap
6%
4% 4% between three bedroom and four bedroom
0% 1% properties is high) and/or already stretched
2004 2008 2012 2016 2020 borrowing ability. Another factor is likely to
Mover Multiple Property Multiple Property be the COVID-related uncertainty, so if a
Owner Mortgage Owner Cash
mover doesn’t need to relocate, they’re
First Home Buyer New to Market Other ReEntry preferring instead to stay where they are
and ride out any uncertainty.
Buyer Classification – Northland region
Meanwhile, first home buyers and
(% of purchases)
mortgaged multiple property owners
40% (MPOs, or investors) continue to jostle for
market share, both sitting at 26% in Q2 –
34%
their figures have been close to each other
30% for about the past 18 months now. Despite
29%
the high cost of housing in Auckland, FHBs
22% 22%
20% are holding on well (in some cases targeting
17% apartments due to the lower entry cost),
15% 15%
15% and although gross rental yields are lower
10%
7% than in the past, investors clearly still see
6% 7%
4% some value in the Auckland market.
4% 3%
0%
2004 2008 2012 2016 2020 Finally, there are hints that cash investors
Mover Multiple Property Multiple Property (MPOs) may be starting to hunt out some
Owner Mortgage Owner Cash bargains – their share of purchases rose to
First Home Buyer New to Market Other ReEntry 13% in Q2, up from 11% in late 2019.
Admittedly, part of that rise in % market share can be explained by a lower number of purchases by other
groups, but even so, anecdotal evidence still points to some cash investors genuinely targeting Auckland
property again now.
Around Auckland’s neighbouring areas, the mix of buyers across the Northland region is strongly weighted
towards movers. However, over the past five years their share of sales has reduced, with mortgaged investors
increasing their share. First home buyers had also been taking a larger share over the last few years but that
has come back in the last two quarters.
26Auckland Values
Average value of housing stock – Annual and quarterly value change –
Auckland ($) Auckland (%)
$1,082,541
$1,100,000 25% $16,506 1 .5%
$55,428 5 .4%
$1,000,000 $240,935 29%
20%
$900,000
$800,000 15%
$700,000 10%
$600,000
$500,000 5%
$400,000 0%
$300,000
$200,000 -5%
$100,000 -10%
2005 2008 2011 2014 2017 2020 2005 2008 2011 2014 2017 2020
On the usual measure we report on (rolling three month sales index), Auckland’s property values have generally held up
better since March than looked likely in the early days of alert level four lockdown. The overall Auckland change from March
to June was 1.5%, albeit there was a 0.3% drop in June alone. Waitakere, Manukau, and Papakura recorded stronger gains in
Q2, with Franklin, North Shore, and Rodney lagging a little.
However, when we look at the broader measure of all sales in the June quarter, the patterns have been more subdued.
On this measure, Franklin saw values rise by 0.7% in Q2, and Rodney and Waitakere only saw minor drops of 0.5%. But the
North Shore and Auckland City saw larger falls, which repeats the experience of early 2019, when the more expensive areas
saw larger declines.
Overall, it’s early days yet, and different measures reveal slightly different patterns – e.g. the evidence from the second half
of June alone was more encouraging than for Q2 as a whole. But the risks to Auckland (and national) property values in the
coming months are still more likely to the downside than upside.
JUNE 2020
Current Value 1 month 3 months 12 months 5 years
Rodney $982,802 -0.1% 0.8% 4.1% 34%
North Shore $1,247,243 -0.8% 1.2% 5.9% 26%
Waitakere $857,496 -0.1% 2.0% 5.3% 28%
Auckland City $1,277,755 -0.6% 1.6% 5.8% 27%
Manukau $939,908 0.2% 1.9% 5.7% 34%
Papakura $728,414 0.6% 1.8% 2.7% 43%
Franklin $696,001 1.1% 1.3% 3.5% 34%
27Current Auckland Suburb Values
Auckland suburb value change 2020 ($)
Although property value trends since lockdown have weakened, the prior 6-9 months had seen an upturn,
and so annual comparisons are still relatively strong. CoreLogic’s interactive ‘Mapping the Market’ product
shows these changes, it’s freely available and updated quarterly. The heatmaps in ‘Mapping the Market’ are
point-in-time snapshots of median values from 2019 and 2020, and show the % and $ change over that period
too. See www.corelogic.co.nz/mapping-market
Auckland is illustrated in the heatmap here. As at June 2020, Herne Bay remained the highest priced suburb
in Auckland, with a median property value of $2.61m. Orere Point had the lowest median value, of around
$535,000. Only eight suburbs had a median value $100,000.
28 *Based on CoreLogic Median E-valuer29
Hamilton Market Activity
Buyer Classification – In Hamilton, although the number of
Hamilton (% of purchases) property transactions has dropped away
in Q2 (as it has done everywhere across
40% the country), the figures relating to %
market share of purchases have stayed
31% pretty steady.
30% 31%
27% Cash multiple property owners (investors)
26%
25%
23% have held steady at around a 10% market
20% share, while movers have also been
relatively unchanged at 23%. These two
buyer groups in Hamilton have tended to
10% 10%
have relatively consistent market shares
7%
4% over the longer run too.
4%
0% 3% 2%
Meanwhile, mortgaged investors’ market
2004 2006 2008 2010 2012 2014 2016 2018 2020
share of purchases was 31% in Q2, up a
Mover Multiple Property Multiple Property
Owner Mortgage Owner Cash little from Q1, but still in line with recent
norms. And then finally, first home buyers
First Home Buyer New to Market Other ReEntry
had a 26% market share in Q2, down a little
Buyer Classification – Waikato Region from Q1, but again pretty much in line with
the recent past.
(% of purchases)
Around the wider Waikato region (excluding
Hamilton), buyer classification patterns
were also pretty consistent from Q1 to Q2,
even though we had lockdown early in Q2.
31%
30% The biggest difference between Hamilton
25% itself and the wider region is that movers
21% have a higher share of activity outside the
19% city, with FHBs and investors taking a lower
17% 18%
profile in areas such as Waikato District
14%
and Waipa.
6%
6%
4% 5%
3% 2%
Mover Multiple Property Multiple Property
Owner Mortgage Owner Cash
First Home Buyer New to Market Other ReEntry
30Hamilton Values
Average value of housing stock – Annual and quarterly value change –
Hamilton ($) Hamilton (%)
$627,777
$4,490 0 .7%
$600,000 30% $42,513 7 .3%
$245,984 64%
$500,000 25%
20%
$400,000
15%
$300,000 10%
5%
$200,000
0%
$100,000 -5%
$0 -10%
2005 2008 2011 2014 2017 2020 2005 2008 2011 2014 2017 2020
Hamilton’s average property values rose by 0.7% from March to June, albeit there was a minor dip of 0.2% in June alone.
The average value of a property in the city now stands at $627,777.
Hamilton North East weakened the most in Q2 (0.8% drop), while Central & North West showed a 0.7% rise. Meanwhile,
there was a degree of residual strength in Hamilton South East and South West.
Outside Hamilton, the Waikato District continued to see gains, with average values up by almost 4% in Q2. However, Waipa
for example saw values decline in June itself and over the three month period from March (-1.1%).
JUNE 2020
Current Value 1 month 3 months 12 months 5 years
Hamilton Central
$587,512 -0.4% 0.7% 8.9% 64%
& North West
Hamilton North East $767,383 -0.9% -0.8% 4.8% 58%
Hamilton South East $587,117 0.4% 1.6% 8.9% 69%
Hamilton South West $561,994 0.8% 2.1% 7.9% 67%
31Tauranga Market Activity
Buyer Classification – During the period from April to June,
Tauranga (% of purchases) movers remained the key buyer group in
Tauranga, accounting for 30% of purchases
(albeit in a quieter overall market in terms
40% of number of transactions). This illustrates
how a solid base of equity/wealth (which
33% movers have, either from having lived
30%
30% locally or bringing in equity from other
parts of the country) is important in
23% 22% Tauranga, rather than necessarily local
20%
19%
16% 17% wages being a key driver for a property
15% purchase.
10%
6% 6% Meanwhile, another interesting trend is the
4% 4% rising market share for cash investors,
3% 2%
0%
accounting for 19% of purchases in Q2, up
2004 2006 2008 2010 2012 2014 2016 2018 2020
from 14% a year ago. Of course, given that
Mover Multiple Property Multiple Property
they don’t need to try and secure a
Owner Mortgage Owner Cash
mortgage (in a still-controlled lending
First Home Buyer New to Market Other ReEntry
environment), it is logical that their market
Buyer Classification – Bay of Plenty share will tend to rise in these conditions.
Region (% of purchases) Generally speaking, Tauranga’s patterns are
replicated across the wider Bay of Plenty
50% region (excl. Tauranga), with movers a key
buyer group, and cash investors having
40% recently seen a rising market share.
30% 30%
29%
27%
22%
20% 18% 21%
15%
13%
10%
6% 5%
4% 5%
0% 3% 3%
2004 2006 2008 2010 2012 2014 2016 2018 2020
Mover Multiple Property Multiple Property
Owner Mortgage Owner Cash
First Home Buyer New to Market Other ReEntry
32Tauranga Values
Average value of housing stock – Annual and quarterly value change –
Tauranga ($) Tauranga (%)
$794,189
$800,000 $21,746 2 .8%
30%
$50,211 6 .7%
$700,000 25% $308,628 64%
$600,000 20%
$500,000 15%
10%
$400,000
5%
$300,000
0%
$200,000
-5%
$100,000
-10%
$0
2005 2008 2011 2014 2017 2020 2005 2008 2011 2014 2017 2020
The emerging signs of weakness for property values across NZ are yet to be seen to any great degree in Tauranga. Indeed,
our monthly index showed that values rose by 0.2% in June and by 2.8% from March to June. Meanwhile, looking at prices
based across the quarter as a whole, the data for Tauranga was also positive – a rise of more than 1% for Q2. Around the
wider Bay of Plenty, values also continued to increase in Q2, including Rotorua and Whakatane.
33Wellington Market Activity
Buyer Classification – Similar to the rest of the country, the
Wellington (% of purchases) number of property transactions has
fallen around the wider Wellington area
33% (City, Porirua, Lower Hutt, Upper Hutt),
but in that quieter market, the share of
30% 28%
27% purchases made by first home buyers has
27%
held high – in fact, at 33% in Q2, that’s on a
par with the previous peak in Q1 2018. In
20% 21% other words, FHBs are still a strong
presence in these markets.
Meanwhile, the share of purchases made
10%
8% by mortgaged multiple property owners
7%
5% (investors) also remains high by past
4% 4%
3% standards, at 28%. About two years ago,
0% 2%
it was less than 25%. By contrast, movers’
2006 2008 2010 2012 2014 2016 2018 2020 market share has continued to edge down,
Mover Multiple Property Multiple Property now sitting at just 21% - a year ago it
Owner Mortgage Owner Cash
was 24%.
First Home Buyer New to Market Other ReEntry
At a more detailed level, mortgaged
Buyer Classification – Lower Hutt investors actually have a higher market
(% of purchases) share (33%) in Wellington City itself than
FHBs (30%), while in Upper Hutt movers
and FHBs are neck and neck for first place
40% (33% each). In Porirua and especially Lower
38%
Hutt, FHBs are the top buyer group –
30% in Lower Hutt, their market share in Q2
30% 30%
was 38%, well above the next group
25% (mortgaged investors) at 23%.
23%
20% 20%
10%
7%
5% 5%
4% 4%
0% 3% 2%
2006 2008 2012 2016 2020
Mover Multiple Property Multiple Property
Owner Mortgage Owner Cash
First Home Buyer New to Market Other ReEntry
34Wellington Values
Average value of housing stock – Annual and quarterly value change –
Wellington ($) Wellington (%)
$783,655
$800,000 $3,253 0 .4%
$73,852 10 .4%
$700,000 20% $323,904 70%
$600,000 15%
$500,000
10%
$400,000
5%
$300,000
0%
$200,000
$100,000 -5%
$0 -10%
2005 2008 2011 2014 2017 2020 2005 2008 2011 2014 2017 2020
Property values around the wider Wellington area have begun to show some signs of weakness, falling by 0.5% in June
across the City, Porirua, Upper Hutt, and Lower Hutt. However, over the three month measure, only Wellington City saw
values drop (by 0.4%). Across the region, Carterton also weakened a bit in Q2 (-1.3%).
That general pattern was replicated on the measures looking at the quarter as a whole, which showed a fall for values
across the City, Porirua, Upper Hutt and Lower Hutt of 0.4% in Q2.
JUNE 2020
Current Value 1 month 3 months 12 months 5 years
Porirua $691,176 -0.2% 1.1% 15.5% 80%
Upper Hutt $639,489 1.0% 2.0% 13.6% 90%
Lower Hutt $686,283 -0.3% 1.6% 15.0% 82%
Wellington City $887,633 -0.8% -0.4% 7.3% 62%
Carterton $477,087 0.3% -1.3% 10.1% 81%
Masterton $440,126 3.3% 2.7% 14.3% 81%
South Wairarapa $578,835 -0.9% 1.8% 14.7% 90%
Kapiti Coast $669,773 0.1% 1.8% 11.4% 75%
35Christchurch Market Activity
Buyer Classification – Christchurch has been a first home buyer’s
Christchurch (% of purchases) market in recent years (partly due to flat
house prices which has helped FHBs to
40% have more time to raise larger deposits),
but the spread of activity evened out in
33% Q2 (bearing in mind the drop in overall
30% numbers of sales). FHBs’ share of purchases
dropped from 28% in Q1 to 25% in Q2,
24% 25%
23% 24% while movers’ share rose from 23% also
20% to 25%. At the same time, mortgaged
investors’ share of activity held pretty
14%
steady at 24%.
10%
8% 6% Similar to many other parts of the country,
4% 5% cash investors’ share of purchases rose in
4%
0% 2% Q2 in Christchurch, and is now up from 12%
2004 2006 2008 2010 2012 2014 2016 2018 2020 six months ago to 14%. We get the sense
that cash investors are starting to hunt out
Mover Multiple Property Multiple Property
Owner Mortgage Owner Cash ‘bargains’ in a subdued market. But cash
First Home Buyer New to Market Other ReEntry investors’ ability to gain market share is also
helped by the fact that other buyer groups
are restricted by still-restrained credit
Buyer Classification – Canterbury
policies at the banks (which don’t impinge
(% of purchases)
on cash buyers).
Around the wider Canterbury region
50%
(excl. Christchurch), movers had the largest
market share in Q2 (39%), followed by FHBs
40%
39% (22%), and mortgaged investors (17%).
35% Selwyn, Waimakariri, Ashburton, and
30% Timaru are all markets where movers
(i.e. existing owner-occupiers who are
22% 22%
20% relocating) are key players.
16% 17%
13%
10% 6% 10%
5%
5% 5%
0% 3% 2%
2004 2006 2008 2010 2012 2014 2016 2018 2020
Mover Multiple Property Multiple Property
Owner Mortgage Owner Cash
First Home Buyer New to Market Other ReEntry
36Greater Christchurch Values
Average value of housing stock – Annual and quarterly value change –
Christchurch ($) Christchurch (%)
$518,369
$3,925 0 .8%
$500,000 35% $18,435 3 .7%
$44,100 9%
30%
$400,000 25%
20%
$300,000 15%
10%
$200,000
5%
0%
$100,000
-5%
$0 -10%
2005 2008 2011 2014 2017 2020 2005 2008 2011 2014 2017 2020
Christchurch’s housing affordability is better than each of the other main centres and this might make it slightly more
immune to a downturn. Indeed, so far the signs of weakness are less obvious, with average values still rising, by 0.2% in
June and 0.8% since March (despite some value falls in Banks Peninsula). Selwyn and Waimakariri also saw values continue
to rise in Q2.
JUNE 2020
Current Value 1 month 3 months 12 months 5 years
Banks Peninsula $539,096 -1.6% -1.9% 3.2% 10%
Christchurch Central & North $607,304 0.4% 1.3% 3.0% 9%
Christchurch East $393,126 -0.2% 0.4% 4.0% 10%
Christchurch Hills $709,750 1.2% 0.8% 4.5% 10%
Christchurch Southwest $492,086 0.1% 0.5% 3.7% 9%
Selwyn $567,795 0.6% 0.8% 1.9% 10%
Waimakariri $465,639 0.5% 0.9% 3.3% 11%
37Dunedin Market Activity
Buyer Classification – As has been the case for a few quarters
Dunedin (% of purchases) now, mortgaged multiple property owners
(investors) remain the key group in
Dunedin, accounting for 29% of purchases
30% 29% 29% in Q2 (in a quieter overall market). That’s a
28% record high, and likely to have been driven
23% by solid capital gains and higher gross
23% rental yields than in the other main centres.
20%
20%
By contrast, movers and first home buyers
have been quieter in Dunedin of late. These
broad patterns apply across the wider
10% 11% Otago region too, with investors still
8% 6% important in Queenstown.
7% 6%
4%
0% 2%
2006 2008 2012 2016 2020
Mover Multiple Property Multiple Property
Owner Mortgage Owner Cash
First Home Buyer New to Market Other ReEntry
Buyer Classification – Otago
(% of purchases)
40%
30% 30%
26%
23% 22%
20% 21%
18% 17%
15%
10%
6% 6%
5% 5%
0% 3% 2%
2004 2006 2008 2010 2012 2014 2016 2018 2020
Mover Multiple Property Multiple Property
Owner Mortgage Owner Cash
First Home Buyer New to Market Other ReEntry
38Dunedin Values
Average value of housing stock – Annual and quarterly value change –
Dunedin ($) Dunedin (%)
$547,531
35% $9,506 1 .8%
$87,083 18 .9%
$500,000 30% $251,483 85%
25%
$400,000
20%
15%
$300,000
10%
$200,000 5%
0%
$100,000 -5%
$0 -10%
2005 2008 2011 2014 2017 2020 2005 2008 2011 2014 2017 2020
Dunedin property values have generally held up well since the end of March, rising by almost 2% across the city as a
whole, with Taieri leading the way (2.7%). However, analysing all sales across the quarter has shown signs of weakness,
down by more than 2% for Q2 as a whole.
JUNE 2020
Current Value 1 month 3 months 12 months 5 years
Dunedin Central & North $558,691 -0.6% 1.8% 17.3% 83%
Dunedin South $525,107 -2.6% 0.3% 18.8% 84%
Peninsula and Coastal $493,532 0.2% 0.5% 19.0% 77%
Taieri $575,953 -0.2% 2.7% 20.1% 89%
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