Want to own a home? “Head South”
Even though Immigration Minister Michael Woodhouse recently gave the advice to “head south” to only those looking for a job, he might as well have said the same to Aucklanders looking to fulfil their Kiwi dream of owning a house. More so when recent real estate figures are showing that house prices have either plateaued or seen relatively modest gains in the South Island as compared to its northern counterpart (Auckland).
Prices
The latest monthly Quotable Value (QV) Price Index released on August 5 shows that while prices across the Auckland region are up 18.8% annually, it is only 3.1% in Christchurch. In fact, lower south in Invercargill, the change has been negative 0.1%.
| 12 month change (in %) | average value (in NZ$) | |
| Auckland | 18.8 | 855,672 |
| Nelson | 3.3 | 414,989 |
| Christchurch | 3.1 | 475,322 |
| Queenstown Lakes | 6.0 | 717,021 |
| Dunedin | 2.8 |
298,928
|
| Invercargill | -0. | 207,367 |
Courtesy: QV
Affordability
Another important insight on housing prices is provided by the just released interest.co.nz Home Loan Affordability Series reports for first-time and standard home buyers.
“Based on our standard household profile, it now takes 40.3% of the median take-home pay to service a mortgage of a median priced home purchased in July 2015. Though it has slightly dropped from 41.1% a year ago, median-priced housing is still not affordable for families in New Zealand, even when both adults work. The profile we use for a standard buyer household is one adult male working full-time, one adult female working 50%, and one child aged 5 years,” wrote the Report authors.
| %age of the medium take-home pay to service mortgage of a medium-priced home purchased in July 2015 | |
| New Zealand | 40.3 |
| Auckland | 63.4 |
| Nelson | 37 |
| Christchurch | 39.3 |
| Queenstown Lakes | 61.2 |
| Dunedin | 27.9 |
| Invercargill | 19.3 |
Courtesy: interest.co.nz
Notably, for Auckland (63.4%) this percentage is considerably higher than the national average (40.3%). While for Dunedin it is just 27.9%.
Sales Volume
As regards to sales volume, data provided by the Real Estate Institute of New Zealand (REINZ) indicate that volumes were stronger in Auckland than in the rest of the country. So while it was 36.3% annual increase in seasonally adjusted sales volume in Auckland, the same figure was only 6.3% in Canterbury, meaning not many properties are changing hands there indicating over-supply.
| Seasonally adjusted sales volume increase compared to July 2014 (in %) | |
| New Zealand | 34.9 |
| Auckland | 36.3 |
| Wellington | 11 |
| Canterbury | 6.3 |
| Dunedin | 9 |
A point aptly explained by REINZ's regional director for Canterbury/Westland regions, Jim Davis, who said, “The market appears to be reverting more towards its pre-quake pattern with winter months seeing a decrease in listings, pending a rise in new listings in the spring. New subdivisions are largely complete meaning that new supply from these new builds is falling away to more long-run levels."
Auctions
A final indication of the change in housing prices can be to see how many dwellings were sold via auctions in the region, as these invariably drive the prices up.
Here too, Auckland leaves the South Island far behind.
Of all the auction sales in the country in the month of July, 74% happened in Auckland. Waikato/Bay of Plenty accounted for 13%, Canterbury/Westland for 8% and all other regions combined accounted for the remaining 5%.
Measures
All the above clearly demonstrates that while Auckland may be in the midst of a “housing bubble” aided by speculative investment buying, properties in South Island are relatively easy to aspire for.
Even the government realised this, and changed the immigration rule recently to give more points towards residency to skilled migrants (up from 10 to 30) and entrepreneurs (double from 20 to 40) who set up a business or accept a job offer outside Auckland. A move, which Prime Minister John Key hopes, will serve the dual purpose of giving the much needed economic impetus to Regions as well as ease the demand pressure that new immigrants put on Auckland's housing stock.
Even though Immigration Minister Michael Woodhouse recently gave the advice to “head south” to only those looking for a job, he might as well have said the same to Aucklanders looking to fulfil their Kiwi dream of owning a house. More so when recent real estate figures are showing that house...
Even though Immigration Minister Michael Woodhouse recently gave the advice to “head south” to only those looking for a job, he might as well have said the same to Aucklanders looking to fulfil their Kiwi dream of owning a house. More so when recent real estate figures are showing that house prices have either plateaued or seen relatively modest gains in the South Island as compared to its northern counterpart (Auckland).
Prices
The latest monthly Quotable Value (QV) Price Index released on August 5 shows that while prices across the Auckland region are up 18.8% annually, it is only 3.1% in Christchurch. In fact, lower south in Invercargill, the change has been negative 0.1%.
| 12 month change (in %) | average value (in NZ$) | |
| Auckland | 18.8 | 855,672 |
| Nelson | 3.3 | 414,989 |
| Christchurch | 3.1 | 475,322 |
| Queenstown Lakes | 6.0 | 717,021 |
| Dunedin | 2.8 |
298,928
|
| Invercargill | -0. | 207,367 |
Courtesy: QV
Affordability
Another important insight on housing prices is provided by the just released interest.co.nz Home Loan Affordability Series reports for first-time and standard home buyers.
“Based on our standard household profile, it now takes 40.3% of the median take-home pay to service a mortgage of a median priced home purchased in July 2015. Though it has slightly dropped from 41.1% a year ago, median-priced housing is still not affordable for families in New Zealand, even when both adults work. The profile we use for a standard buyer household is one adult male working full-time, one adult female working 50%, and one child aged 5 years,” wrote the Report authors.
| %age of the medium take-home pay to service mortgage of a medium-priced home purchased in July 2015 | |
| New Zealand | 40.3 |
| Auckland | 63.4 |
| Nelson | 37 |
| Christchurch | 39.3 |
| Queenstown Lakes | 61.2 |
| Dunedin | 27.9 |
| Invercargill | 19.3 |
Courtesy: interest.co.nz
Notably, for Auckland (63.4%) this percentage is considerably higher than the national average (40.3%). While for Dunedin it is just 27.9%.
Sales Volume
As regards to sales volume, data provided by the Real Estate Institute of New Zealand (REINZ) indicate that volumes were stronger in Auckland than in the rest of the country. So while it was 36.3% annual increase in seasonally adjusted sales volume in Auckland, the same figure was only 6.3% in Canterbury, meaning not many properties are changing hands there indicating over-supply.
| Seasonally adjusted sales volume increase compared to July 2014 (in %) | |
| New Zealand | 34.9 |
| Auckland | 36.3 |
| Wellington | 11 |
| Canterbury | 6.3 |
| Dunedin | 9 |
A point aptly explained by REINZ's regional director for Canterbury/Westland regions, Jim Davis, who said, “The market appears to be reverting more towards its pre-quake pattern with winter months seeing a decrease in listings, pending a rise in new listings in the spring. New subdivisions are largely complete meaning that new supply from these new builds is falling away to more long-run levels."
Auctions
A final indication of the change in housing prices can be to see how many dwellings were sold via auctions in the region, as these invariably drive the prices up.
Here too, Auckland leaves the South Island far behind.
Of all the auction sales in the country in the month of July, 74% happened in Auckland. Waikato/Bay of Plenty accounted for 13%, Canterbury/Westland for 8% and all other regions combined accounted for the remaining 5%.
Measures
All the above clearly demonstrates that while Auckland may be in the midst of a “housing bubble” aided by speculative investment buying, properties in South Island are relatively easy to aspire for.
Even the government realised this, and changed the immigration rule recently to give more points towards residency to skilled migrants (up from 10 to 30) and entrepreneurs (double from 20 to 40) who set up a business or accept a job offer outside Auckland. A move, which Prime Minister John Key hopes, will serve the dual purpose of giving the much needed economic impetus to Regions as well as ease the demand pressure that new immigrants put on Auckland's housing stock.
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