OneRoof has identified the suburbs that have the potential to lead the housing market rebound.
An analysis of the latest figures from the OneRoof-Valocity House Value Index, covering the year to the end of June, highlights the locations where house prices are on the road to recovery after more than a year of decline.
OneRoof studied property value changes in 798 suburbs with 20 or more settled sales in the last 12 months, and identified the major metro suburbs that are primed for a revival as well as the suburbs where house prices are up year-on-year and quarter-on-quarter.
OneRoof editor Owen Vaughan said the research should provide buyers and sellers with a roadmap for the second half of the year, and help them make decisions as to where property values are likely to grow.
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“The OneRoof analysis found 107 suburbs in Auckland, Christchurch, Dunedin and Wellington where property values are in a prime position for growth over the next six months,” Vaughan said.
“Almost half of the suburbs on the list recorded quarter-on-quarter value growth, with 17 suburbs enjoying value growth of more than 1%.”
The strongest rises were in Christchurch and Dunedin, with the three best-performing metro suburbs in the last three months:
• Bromley, Christchurch, up 3% to $515,000;
• Aranui, Christchurch, up 2.6% to $466,000; and
• Waikouaiti, Dunedin, up 2.1% to $527,000.
Vaughan said: “Most of the metro growth suburbs had an average property value of less than $1 million, a strong indication that first-home buyers will be driving much of the revival, although the rebound in prices in several wealthy suburbs suggests the top end of the housing market is in the mood to buy again.”
The research also identified another 69 suburbs where the rate of value decline had slowed significantly over the last six months. Many of the biggest turnarounds were in Wellington and Auckland, both of which have been hit hardest by the slump.
Primed to record growth in the second half of the year are some of the country’s most popular and prized suburbs, including Grey Lynn, Ponsonby and Remuera, in Auckland; and Fendalton and Merivale, in Christchurch.
“Affordable suburbs in Auckland’s south are also on the rebound list including Mangere East, Manurewa and Wiri,” Vaughan said. “However, suburbs in Hamilton, Queenstown-Lakes and Tauranga remain under pressure, with the research finding no strong evidence of an immediate revival in their prices.”
Vaughan said the strongest rebounds were happening outside of the country’s major metros, with 64 regional suburbs, most of which were in the South Island, Taranaki and Northland, recording value growth over the last three months.
“The biggest quarterly value lifts were in Woodville, Eketahuna, Pahiatua and Dannevirke, all in Tararua, Manawatu-Whanganui. The four suburbs all have an average property value of less than $500,000 - a likely contributing factor to the 10%-plus lift in values over the last three months.
“Twenty-three of the suburbs on the list were also up year-on-year, including Reefton and Westport, on the West Coast. The one standout higher value suburb was Russell, in Northland, which has an average property value of $1.614m.”
The research identified another 23 suburbs, again mostly in the South Island, where the average property value was up year-on-year but down over the quarter, which suggests they may not be as well placed for a revival as others.
The latest OneRoof-Valocity House Value Index figures show minimal changes in the overall housing market, with the nationwide average property value down 2.1% in the three months to the end of June and down 11.1% year-on-year to $944,000.
Of the country’s 17 regions, only West Coast, Taranaki and Southland were up over the quarter, with Otago slipping into negative territory after Queenstown-Lakes’ strong growth spurt came to an end.
Seven regions were down more than 2% over the quarter, with the biggest drop in Hawke’s Bay (-3.5%), Waikato (-3.1%) and Gisborne (-2.9%).
The figures show the pace of the value decline has slowed in Auckland and Wellington, over the last quarter, although it has picked up speed in Canterbury, which shows the end of the downturn is unlikely to be clean or unified.
The West Coast remains the only region to have enjoyed continued value growth throughout the slump, although the pace of growth has slowed in the last two quarters.
Vaughan said continued drops in new listings volumes, at a time when the market was bottoming out, should be a concern for buyers who held off purchase decisions in the hope of further price drops.
“Total listings for June were up 6.5% year-on-year nationwide but new listings were down almost 10% over the same period. New listings are down year-on-year in all but four regions, with the biggest shortages in cyclone-hit Gisborne and Hawke’s Bay, down 62% and 24% respectively.
“New listings are down 21% year-on-year in Wellington and down 17% in Auckland, with the drought having an impact on total listings in both regions. We are increasingly hearing from agents that they have the buyers but the stock just isn’t there, and that auctions have started to become more competitive.
“Tightness in listing volumes will tilt the market in favour of sellers in many locations.”
Wayne Shum, senior researcher at OneRoof's data partner, Valocity, said the Reserve Bank's signal in May that the cash rate had peaked at 5.5% would provide certainty to the market.
"The slip into recession would suggest the Reserve Bank's action to bring down inflation has worked although we won't know for sure how successful the aggressive lifts in rates have been until the latest CPI figures come out later this month," Shum said.
Shum noted that supporting factors for a revival in the market included rise in net migration and the expected pressure on rents.
He warned that the market wasn't out of the woods just yet. "There is still mortgage pain to come for existing borrowers – at the end of Q1 this year the effective interest rate was 4.7% and is now sitting around the 6% mark, with further rises in the forecast by Q4.
"Home-owners are unlikely to be making additional purchases and instead may focus on paying down debt.
Mortgage arrears rose over the past quarter, however remain below the months immediately post-Covid lockdown, and the aftermath of the GFC."
