The current state of play in New Zealand’s property market has just been released in the CoreLogic Monthly Property Market and Economic Update and it's a very mixed picture.
At 7.3 per cent, property value growth for March was the strongest annual value growth rate change since June 2017. This result is no doubt helped along by a continuation in low interest rates supporting lending and favourable employment figures (at just 4.5 per cent, unemployment is the lowest it's been since 2008).
Sales activity is not such a pretty picture. More than 9,500 properties sold last month, but that's 2 per cent down year on year across the country. But when you look at the three-month combined figures, things improve slightly - sales activity then becomes higher than a year ago for Hamilton, Christchurch and Dunedin.
So who is actually buying? According to CoreLogic buyer classification data, the most active groups are first-home buyers and multiple property owners. Twenty-two per cent of property sales are going to first-home buyers who are incentivised to purchase, with both rising rental costs and access to their KiwiSaver funds for deposits. Interestingly in 2017, more than $700 million was withdrawn for first-home buyers, at an average of $18,000 per KiwiSaver account.
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After easing off in the wake of LVR restrictions, multiple property owners have returned their share of the market to 37 per cent. Extra regulations around the provision of rental properties do not appear to be deterring investors at this point.
Interest rates are also worthy of mention. These remain low, with banks competing strongly for the best borrowers. About 80 per cent of all New Zealand mortgages are at fixed rates: and of those, almost 90 per cent are exposed to any market interest rate rises over the next two years due to expiry dates. The prospect of no change in the official cash rate until at least the New Year remains likely but the next Reserve Bank Monetary Policy Statement (and rates review) happens on May 10, which will provide more clarity.
Building consents continue to rise steadily, and importantly this is driven by Auckland's figures, where new housing stock is needed the most. New Zealand's biggest city accounts for 37 per cent of New Zealand's building consent figures and the 13.9 per cent lift in Auckland's residential building consents (measured in the year to March 2018) is good news, but it's a long way off closing the shortfall from the previous few years.
Although not so great for the pace of regional economic growth, the fact that new dwelling consents is easing in other areas of New Zealand, especially in Waikato and Canterbury, could be a good thing for Auckland - it needs all the labour force it can get.
Download the full CoreLogic report here.
Nick Goodall is head of research at CoreLogic.
