The city that's seen the biggest spring bounce

Wellington has enjoyed the biggest spring bounce among New Zealand's major cities, with property values in the city growing 3.9 percent over the last three months.

According to the October CoreLogic QV House Price Index, this takes the annual rate of capital gain in Wellington City to 9.6 percent and illustrates a similar trend to the rebound seen last spring, when the annual rate was a slightly higher 10 percent, after recovering from another underwhelming winter for property values.

A shortage of total properties listed for sale remains a constant in the capital, so properties that are listed for sale are still attracting competitive interest - which is in turn seeing an increase in values. Spring has also seen the normal seasonal lift in new listings being added to the market however with a consistently low number of days to sell the impact of new listings is reduced.

Strong population growth (much like the rest of the country) and a buoyant labour market, supported by the public sector (and associated high-paid jobs) is boosting demand. First home buyers aren’t as active as last summer, as many look slightly further afield for better value, but investors, accounting for 41 percent of sales in Q3, continue to find value in the city.

Meanwhile, property values continued to increase in Dunedin, with the rolling quarterly rate of growth strengthening to 2.8 percent (from 2.4 percent previously). Similar figures were also present in Hamilton (2.8 percent quarterly growth), however annual growth here remains below 6 percent, well short of the 10.5 percent experienced in Dunedin.

In Auckland, property values continue to hold reasonably steady – up 0.2 percent over the month but down 0.3 percent according to the quarterly measure. The sub-regions of Auckland are generally recording flat conditions as well, with six of the seven areas seeing quarterly growth range from -0.6 percent to +0.5 percent. Only Franklin sits outside this range, at 0.9 percent growth. Franklin remains the most affordable of the old ‘cities’, with an average value of $671,000 and is mostly represented by the town of Pukekohe, which makes up 42 percent of all properties in the area (and to a lesser degree Waiuku with a further 20 percent).

Christchurch meanwhile, saw zero change in property values over the month. Similar to Auckland, this is a continuation of a long term trend with the annual growth rate in Christchurch remaining below 1% since June 2017. Questions remain about whether there’s a risk of oversupply in Christchurch and the broader region surrounding the city, however with values enduring their hold and properties continuing to sell, the answer remains "not quite yet".

It is however important to note that the number of building consents being issued is hovering above ‘normal’ levels prior to the 2010/11 earthquakes, despite the bulk of the residential rebuild well and truly over and the market already appearing "in balance".

So the risk of oversupply in some areas of the city/region (or for some types of property) in the future does linger.