Recent property figures reveal tale of two cities in growth and decline in property values - REINZ

May 10, 2019

Chief executive Bindi Norwell joined Breakfast to explain the ups and downs of the property market.

Recent figures from the Real Estate Institute New Zealand (REINZ) revealed a tale of two cities when it comes to the relative growth or decline of property and house values.

The statistics come from six months' worth of aggregated data, which was compared to six months last year, REINZ chief executive Bindi Norwell said. The minimum sample size was 20 properties per suburb.

"When we look at a suburb-level, we do magnify things, so when we look in the increases and decreases, there's a lot of factors that play into that," she said on TVNZ1's Breakfast this morning.

"So if we had an apartment building that came in, that’s cheaper pricing, it may bring the median down. If we had more properties sold over $1 million, yes, they may impact the median as well, and so we've looked at all of that."

One example was the central Auckland suburb of Mt Albert, which saw house and property values declined 30 per cent. However, figures showed that the number of apartments increased by 25 per cent compared to last year, she said.

"So new apartments – actually, that’s not a bad thing. It opens up opportunities for first homebuyers as well, and the number of properties that sold over $1 million declined, so that's why it explains the figures.

"I just want people to feel it doesn’t mean it’s their property that's going down 30 per cent or up 30 per cent – it's just looking at an area."

Ms Norwell said the aim for higher density suburbs was to create cheaper housing by "opening up land to develop new apartments as well, or a mixed type of housing – a variety of housing to suit people’s needs."

She said while Auckland's housing market has been "stable for three years", the regions are continuing to grow as Kiwis move away from the cities for more affordable lifestyle options.

"Auckland's stable. It’s been stable for three years. It's been sitting at around $850,000 [median price] for around three years now.

"The regions have been growing – still growing. In terms of double-digit growth, I mean, Wellington's another example, 19 per cent growth year-on-year – huge amount of growth. What we're finding is that people are moving to the regions, they’re staying in the regions and because they're much more affordable, great lifestyle options – and that’s put pressure on the housing market because we can't keep up with the demand."

While some are hopeful that the banks' cutting of the Official Cash Rate (OCR) may help stimulate the housing market, Ms Norwell noted it is "still quite difficult to get access to credit."

"Banks are being much more prudent with lending – rightly so – but it’s hard to get credit."

She said one way to get people who are currently being excluded into the property market

"There's some innovative kind of pricing models out there to help them, but also there are new opportunities opening up with new builds and more affordable housing and apartments."

REINZ’s housing market figures will be released next week.

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