Quarterly Property Market & Economic Update · 2020. 12. 1. · CoreLogic helps clients identify...

Quarterly Property Market & Economic Update New Zealand Quarter 3, 2020

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Table of Contents About CoreLogic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Macro Economic and Demographic Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

New Zealand Asset Classes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

New Zealand and Australia GDP Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

New Zealand Population . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Migration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Regional Building Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Consumer Confidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Housing Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Lending Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Sales Volumes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Listings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Nationwide Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

House Price Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Buyer Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Main Cities Housing Market Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Auckland Market Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Auckland Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Auckland Suburb Value Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Current Auckland Suburb Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Hamilton Market Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Hamilton Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Tauranga Market Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Tauranga Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Wellington Market Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Wellington Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Christchurch Market Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Christchurch Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Dunedin Market Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Dunedin Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

CoreLogic Data and Analytics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Legal Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

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About CoreLogic

CoreLogic is a leading property information, analytics and services provider in the United States, Australia and New Zealand. CoreLogic helps clients identify and manage growth opportunities, improve performance and mitigate risk, by providing clients with innovative, technology-based services and access to rich data and analytics.

Whilst all reasonable effort is made to ensure the information in this publication is current, CoreLogic does not warrant the accuracy, currency or completeness of the data and commentary contained in this publication and to the full extent not prohibited by law excludes all loss or damage arising in connection with the data and commentary contained in this publication.

ContactCall us 0800 355 355

Wellington office Level 2, 275 Cuba Street PO Box 4072 Wellington 6140

Auckland office Level 5 41 Shortland Street Auckland 1010 Email: reports@corelogic .co .nz

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http://www.corelogic.co.nz

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Executive SummaryThe last time we produced this report three months ago, uncertainty about how the property market would emerge from lockdown was still high. Indeed, sales volumes were looking a little fragile, and values themselves had also dropped slightly in certain areas. However, roll forward three months, and it’s been striking how quickly the situation has turned more positive.

In fact, sales volumes in September were nothing but exceptional. The estimated total for both agent and private sales of 9,666 was the single strongest month for more than four years, and it ranks sixth in the list of most active months dating back to May 2007. To be fair, given that year to date volumes are essentially at parity with the same stage in 2019, there is probably still some ‘catch up’ growth taking place after the lull of April/May. Even so, considering the current economic environment, they’re still some impressive sales figures.

Moreover, sales volumes may have been higher still, if not for the shortage of listings actually available on the market. With mortgage credit still accessible, and interest rates low, the strength of buyer demand is not giving that listings situation any time to resolve itself, and this is feeding through into higher prices. The General Election has also obviously been and gone, with no material effect on the market.

The third quarter of the year saw a continued strong presence for first home buyers (FHBs) and mortgaged multiple property owners (MPOs, or investors) in the market, but existing owner-occupiers (movers) continued to sit on the sidelines in many cases. For investors, the ability to enter with a 20% deposit now, rather than the previous 30%, has been a factor – alongside the low returns available on other assets, such as bank deposits. Their share of purchases in Q3 was 26%, the highest since 28% in Q3 2016.

Meanwhile, FHBs are making use of KiwiSaver for their deposits (or at least part of it), while would-be OE’ers who are now instead purchasing a property are also helping to boost overall FHB demand. In fact, the share of property purchases in Q3 made by FHBs was 25%, up from 23% in Q2, and the highest figure in the history of our Buyer Classification series (topping the previous peak of 24% in 2006-07).

Looking at movers, their share of purchases dipped to just 25% in Q3, an historically low level. In some

cases, existing owner-occupiers are choosing to stay where they are due to already high debt levels and the extra costs of moving house (such as legal, estate agent etc). But in other cases, people aren’t moving because they simply can’t find the ideal next property, given the tight supply of available listings. In turn, that is feeding back into an even tighter listings picture.

In terms of property values, most of the country has seen resilience in the past few months, and in many cases further increases (even the previous falls in Queenstown seem to be abating). The national average property value rose by 0.8% in September (to $743,678) and is 2.1% higher than six months ago. The main centres are broadly following that pattern, albeit there are hints that Dunedin’s previously very strong momentum may have slowed a little in the past few months .

In the coming months, there are clearly some risks to be aware of for the property market. Most importantly, the wage subsidy is now wearing off and unemployment could start to rise more significantly. This may affect younger and lower-paid people the most, so could flow through more significantly to the rental side of the property market rather than owner-occupied.

Even so, that risk doesn’t seem enough to knock the property market off course in the short term. After all, the Reserve Bank is doing everything it can to help protect jobs now, and is willing to accept rising asset prices (e.g. houses) as a result of their continued support measures, such as a Funding for Lending Programme and further drops in interest rates .

Earlier in the year, property sales volumes looked like they might be as low as 65,000 for 2020 as a whole, but now they look on track to be about 85,000 – a similar figure to last year. Meanwhile, property values also seem set to continue to rise into 2021. Overall, it’s been a remarkable turnaround in the past three months .

As always, we keep a running monitor on the property market every week via our NZ Property Market Pulse articles, so be sure to check these out on our website http://www.corelogic.co.nz/news-research/all-news/. Our podcast is also a great source of data and commentary: https://corelogicnzpropertymarket.buzzsprout.com/ .

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Macro Economic and Demographic Indicators

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New Zealand Asset Classes

The value of residential property across the country has rebounded from a slight dip in Q2, and sat at $1.25 trillion in Q3. Mortgages are secured against 23% of this value, or in other words, 77% of the value of the property market is household equity. However, it’s also important to note that household debt is high relative to income, and to some extent the debt has only been sustainable in recent years because of low mortgage rates .

After a volatile period during March and April, a steady upwards trend has re-emerged for the value of shares and pooled investment funds. The NZX50 has recently gone back above the 12,000 mark (surpassing pre-COVID peaks), while the values of KiwiSaver pots and the NZ Super Fund have also rebounded strongly.

RESIDENTIAL REAL ESTATE

$1 .25 trillion$289 billion in home loans

COMMERCIAL/INDUSTRIAL REAL ESTATE

$227 billion

NZ LISTED STOCKS

$180 billion

NZ SUPER & KIWISAVER

$118 billion

Sources: CoreLogic NZ, Reserve Bank of NZ, NZX, NZ Super Fund

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-25%

-20%

-15%

-10%

-5%

0%

5%

10%

2004 2008 2012 2016 2020

New Zealand and Australia GDP growth

New Zealand’s GDP dropped by a record 12% from Q1 to Q2, but of course this was pretty much expected, given the alert level four lockdown and severe restrictions on economic activity in April. That followed a drop in GDP in Q1 as well, so it meant that NZ was in technical recession in the first half of the year. Sectors such as transport, construction, and hospitality were the hardest hit by the lockdown.

However, most economic activity indicators have bounced back strongly since Q2 (albeit some of the momentum was stifled by the move back up the alert levels in August) and it’s inevitable that the GDP figures for the third quarter will be much improved. That said, it will be a while yet until the size of the economy returns to where it was pre-COVID, given that we’ve lost international tourism for now .

Indeed, for the calendar year 2020, the economy may shrink by 5-6% in total, only rebounding by 2-3% in 2021 – albeit that recovery would be faster were the borders to re-open sooner than expected.

Source: Reserve Bank of New Zealand, Stats NZ

Annual Average GDP Growth (%)

Annual Change in New Zealand Activity Index and GDP (%)

Australia NZ

GDP NZ Activity Index

-3

-2

-1

0

1

2

3

4

5

6

7

8

1990 1994 1998 2002 2006 2010 2014 2018

8

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

1992 1996 2000 2004 2008 2012 2016 2020

New Zealand Population

National population growth slowed in Q2 2020, from an annual pace of 2.3% in Q1 to 2.1%. Our population passed the 5m mark in the third quarter last year, and is now approaching 5.1m. As ever, the natural rate of increase (births minus deaths) remains pretty steady, at 6,000-7,000 people per quarter, or 25,000-30,000 per year. Not surprisingly, it was the net migration part of the question that slowed the overall population growth rate in Q2. Stats NZ estimates that overall net migration from April to June was just 800 people, the lowest quarterly figure since 300 in Q2 2013.

With borders closed, the gross flows of migrants (i.e. non-citizens arriving, non-citizens departing, kiwis leaving, kiwis returning) have all tailed off since March, and as noted above the net balance of all of these combined has also dropped. However, although the ‘flood’ of returning kiwis post-COVID has probably been exaggerated a bit, it’s still true that the net balance for kiwi migration is much stronger than it was in the 2000s and early 2010s, when the so-called brain drain was in full swing. Indeed, in 2011-12, we lost more than 40,000 NZ citizens in net terms, whereas over the past 12 months we’ve gained about 20,000.

Quarterly Change in National Population (persons per quarter)

Population Change Composition (persons per quarter)

Annual Change in Population (persons)

Source: Statistics New Zealand

4 quarter moving average

-10000

-5000

0

5000

10000

15000

20000

25000

30000

35000

40000

1996 2000 2004 2008 2012 2016 2020

Quarterly population changeNatural increaseNet migration

76000

24400

3600 39001400

53001200

New Zealand Auckland Hamilton Tauranga Wellington Christchurch Dunedin

9

-50,000

0

50,000

100,000

150,000

200,000

2002 2006 2010 2014 2018

Long term migration (12-month rolling totals)

Comparison of old and new net migration series (12-month rolling totals)


NetArrivalsDepartures

-40,000

-20,000

0

20,000

40,000

60,000

80,000

100,000

2002 2006 2010 2014 2018

Old methodNew method

10

0

200

400

600

800

1,000

1,200

1,400

1,600

1995 1999 2003 2007 2011 2015 2019

Regional Building Consents

New dwelling consents trend (consents per month)

Despite being one of the hardest hit sectors of the economy during April’s lockdown and the immediate aftermath, residential construction activity is another area that has held up better than many would have expected in the past 2-3 months. Indeed, after an annual drop of 9% in new dwelling consents in the three months to May, growth has returned and consents in the three months to August were 5% higher than a year earlier. Over the past 12 months, there has been a total of almost 37,500 new residential dwelling consents issued, not far off the recent peak of about 37,900 in February.

Much of the resilience of dwelling consents (and the previous strong growth) can be attributed to smaller dwellings, such as townhouses and apartments – especially in Auckland. This trend seems logical, as we face the need to accommodate an ever-growing population in a more intensified dwelling stock. Of course, at the same time, consents issued for alterations to existing properties are also running at high levels, with more people choosing to renovate rather than relocate. This is also a useful trend in terms of improving the quality of housing .

Looking ahead, the previous peaks in dwelling consents mean that builders still have a solid pipeline of work for a number of months yet, potentially carrying them through well into 2021. In addition, with the available listings of existing houses running at multi-year lows, some households may continue to have little choice but to consider building a house in order to get the property that want. Meanwhile, both the Labour and National parties have indicated that they would continue with a strong state house construction programme, supporting the industry .

That said, as banks continue to assess mortgages closely, it’s conceivable that construction finance will become harder to obtain – and a reduction in general household confidence (as unemployment rises) would also tend to dampen the demand for any finance, even if it’s available. These are headwinds for residential construction.


Auckland regionWaikato regionWellington regionCanterbury regionRest of NIRest of SI

11

0

20

40

60

80

100

120

140

160

2004 2006 2008 2010 2012 2014 2016 2018 2020

Consumer Confidence

ANZ-Roy Morgan Consumer Confidence (index, monthly)

The latest ANZ Roy Morgan measure showed consumer confidence holding steady in August and September, at a score of around 100. These levels are lower than pre-COVID (e.g. 2019’s average was 120), but still higher than the outright weakness we saw in April (85). Consumer confidence is also higher than was typical for much of 2008-09 when the GFC was biting hard.

In other words, confidence amongst households has rebounded from the worst point of alert level four lockdown, but there’s still significant caution. It’ll be interesting to see how the end of the wage subsidy affects consumer confidence, but at the same time, there’ll be support coming through from continued low mortgage rates. On the whole, relative caution amongst households certainly isn’t holding back the housing market to any great degree at present, but we do need to keep an eye on the risks ahead.

As an aside, a similar message applies for business confidence – it’s generally lower than it was pre-COVID, but has recovered from April/May’s lows. Again, however, any flow-through effects from this to the housing market don’t seem to be too major at present .

Sources: ANZ, Roy Morgan

Waikato region

Canterbury regionRest of NIRest of SI

Average

12

0

2

4

6

8

10

12

1986 1990 1994 1998 2002 2006 2010 2014 2018

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

1987 1998 2009 2020

Employment

Annual change in employment, full time and part time

In the second three months of the year, overall employment rose at a consistent pace of 1.6% from a year earlier, the same figure as Q1. However, this is less encouraging than it might seem. For a start, COVID and survey/sampling issues meant that the labour market data faced some distortions in the second quarter. But more importantly, full-time employment (which is the best for the wider economy) growth slowed from 2.1% in Q1 to just 1.4% in Q2, the lowest in almost eight years. Meanwhile, the data backed up other evidence suggesting that one way firms were dealing with the recession was to cut back hours – indeed, part-time employment (which had been falling for most of 2018 and 2019 as some people switched to full-time work) grew by 2 .5% .

The labour force participation rate (people employed or looking for work as a percentage of the working age population) also dropped below 70% in Q2 – for the first time in four years – as some people left the workforce altogether, in some cases because they simply couldn’t look for work during lockdown. This also resulted in a ‘quirky’ unemployment rate result for Q2 of 4.0% (despite COVID it was lower than Q1’s 4.2%), as those people who physically couldn’t look for work weren’t counted as unemployed.

Looking ahead, with the wage subsidy now winding down, the unemployment rate seems pretty likely to rise from now on, and most forecasts are that it will peak at about 8% next year or even into 2022. Indeed, data from the Ministry of Social Development on Jobseeker Support claimants suggests that the unemployment rate may already have risen to about 6%. All else equal, higher unemployment will tend to be a restraint for the housing market, although to the extent that it’s younger/lower-paid workers who feel more of the brunt, it may be the tenant/rental sector that gets more affected than owner-occupation.

Source: Stats NZ, Ministry of Social Development

Labour force participation rate (%)

Unemployment rate (%)

Full timePart time

100,000

120,000

140,000

160,000

180,000

200,000

220,000

240,000

Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20

Number of Jobseeker Support claimants

58

60

62

64

66

68

70

72

1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020

13

3 .4%

3 .6%

3 .8%

4 .0%

4 .2%

4 .4%

4 .6%

4 .8%

5 .0%

5 .2%

2018 2019 2020

0

2

4

6

8

10

12

2000 2009 2018

0

5

10

15

20

25

1965 1971 1977 1983 1989 1995 2001 2007 2013 2019

Interest Rates

In the past few months, the Reserve Bank (RBNZ) has reaffirmed its commitment to ensuring that the economic recovery won’t be undermined by the general bank funding/lending or interest rate environment – their asset purchase programme now stands at $100bn out to June 2022, NZ could have a Funding for Lending Programme (where the RBNZ lends directly to banks at the official cash rate or close to it) before the end of 2020, and we might also have a negative OCR early in 2021. The RBNZ has also emphasised that it wants to prevent unnecessary job losses now, and it is prepared to live with the consequences for asset prices – i.e. that they’ll continue to face upwards pressure from low interest rates. Also bear in mind that the mortgage payment deferral scheme will still run until March next year, the extra bank capital requirements have also been delayed, and the loan to value ratio speed limits are likely to be on hold until at least May .

In this environment, it’s no surprise that mortgage rates continue to drift downwards, and most indications suggest that a typical one or two year fixed rate might be below 2% next year. It’s worth noting that higher debt levels do mean that if/when mortgage rates eventually rise, households will need to be careful. But for now, higher mortgage rates are a long way away, and continued ultra-low rates point to scope for further growth in property values in 2020 and 2021 .

Mortgage Interest Rates (%)

Official Cash Rate and Mortgage Rates (%)

Average Two Year Fixed Mortgage Rates (%)

Source: Reserve Bank of NZ, interest.co.nz

Floating mortgage interest rates2 year fixed rate

OCR historyOCR projection

2-yr fixed mortgage

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Housing Overview

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

15

Early Property Market Indicators

During alert level four lockdown, measures relating to the early stages of a sale process – i.e. pre-listing (such as appraisals generated by real estate agents) and pre-mortgage (valuations ordered by banks) – fell away sharply, which was no surprise. However, as our Early Market Indicators Report shows, they then bounced back steadily, and have recently been running at around normal levels: https://www.corelogic.co.nz/early-market-indicators

In other words, the early stages of both the supply (appraisals, which lead to listings) and demand (borrowers requesting a mortgage, hence the bank ordering a valuation) pipelines are holding up well, which points to further resilience for property sales volumes in the coming months.

Listings

A key and ongoing feature of the NZ property market in recent times has been the low supply of listings available on the market, which has been bolstering property values as buyers continue to face limited choice. There has been no material change in the tight listings situation in the past three months either, with the total stock of existing properties available for sale running at multi-year lows.

In turn, that has reflected both a continued stream of achieved sales (which removes listings at the end of pipeline) but also only a ‘normal’ flow of new listings coming onto the market at the start of the pipeline. Indeed, after the listings lull of April/May, it was possible that we’d subsequently see new listings running above previous levels – but this hasn’t happened.

In some ways, there is a vicious circle going on for listings, with some existing owner-occupiers not moving house because they don’t have much choice about their next property. And of course, those owners are then not listing their own house, which feeds back into even tighter supply conditions. Similarly, other active buyer groups at present – namely first home buyers (FHBs) and mortgaged investors – aren’t generally selling any property before they purchase either (certainly FHBs are not selling anything, by definition).

A similar message applies for new rental listings. In recent weeks, they’ve only been running at ‘normal’ levels, despite the lack of activity in April/May.

Weekly flow of new for-rent listingsWeekly flow of new for-sale listings

Source: CoreLogic

20202019

20202019

16

-3,000

-2,500

-2,000

-1,500

-1,000

-500

0

500

1,000

1,500

2,000

2016 2017 2018 2019 2020

Lending conditions

After the tumultuous period in April/May when mortgage lenders had to focus on their existing clients and process a large number of mortgage payment deferral applications (as well extensions to loan lengths and switches to interest-only payments), attention has now firmly switched back to new mortgage lending activity. Indeed, in July, new lending surged back up to $6.6bn (about $680m higher than a year earlier) and rose even further to $6.8bn in August – a massive $1.4bn higher than the same month in 2019.

However, despite the temporary removal of the loan to value ratio (LVR) speed limits, the bounce-back in mortgage flows hasn’t been driven by a rebound in high LVR lending or a surge in interest-only lending. Indeed, in August, interest-only lending only accounted for 26% of the total – still way below the figures of 40% in 2015-16. Meanwhile, the share of August’s lending at 80% LVR or above was only 11% – for context, bear in mind that the previous high LVR speed limit for owner-occupiers was 20% (and for investors it was 5%).

In other words, banks are still keeping a pretty close eye on lending standards. In addition to the continued deposit requirements, stringent testing of income is still being carried out, as well as checking that a borrower could pay the mortgage at today’s interest rates (circa 2.5%) but also in an alternative scenario where rates spiked to somewhere around 6-6.5%. Mortgage pricing is most attractive to borrowers at a fixed term of about one year at present. Hence, it’s not surprising that nearly 60% of the stock of existing mortgages are fixed for up to one year. About 30% of loans are fixed for more than one year, leaving only a small share on floating rates.

Sources: Reserve Bank of New Zealand

Annual Change in Gross New Lending Flows ($m per month)

Investor Owner-occupier

17

0%

5%

10%

15%

20%

25%

30%

35%

40%

0%

5%

10%

15%

20%

25%

2014 2015 2016 2017 2018 2019 2020

High LVR Lending to Owners and Investors (% of new lending)

Refinancing Profile for Mortgages (% of stock)

Sources: Reserve Bank of New Zealand

Looking ahead, the availability of mortgage finance looks set to stay pretty favourable for borrowers. After all, the Reserve Bank has acknowledged that it does not want to risk a recession and job losses just because credit has been prevented from flowing (or because banks face funding pressures arising from savers ending their term deposits due to low returns). To this end, pretty shortly we could have a Funding for Lending Programme in NZ, where the RBNZ lends directly to banks, at an interest close to or at the OCR . These funds would then be available to lend out as mortgages or business loans at low interest rates .

Finally, it’s worth bearing in mind that although very few new applications for mortgage payment deferrals are being processed each week at present, there are still many existing deferral plans that will run through to March next year. It’ll be important to keep an eye on how smoothly they roll off those deferrals from April .

Floating Fixed < 1 year Fixed > 1 year


18

1996 1999 2002 2005 2008 2011 2014 2017 20200

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

14,000

1996 1999 2002 2005 2008 2011 2014 2017 2020

-80%

-60%

-40%

-20%

0%

20%

40%

Sales Volumes

Nationwide Sales Volumes (monthly total)

Regional Sales Volumes (year-on-year % change)

Nationwide Annual Change in Sales Volumes (%)

After the distortions of April/May, it’s fair to say that the subsequent rebound in property sales volumes has been rapid . The estimated total for September (both agent and private) of almost 9,700 was the highest for any month since May 2016 and also the sixth highest of any month in the past 15 years or so. The rebound in activity has been seen in most parts of the country – and it’s worth noting that sales activity may have been even higher still, were it not for the low supply of property listed and actually available to buy.

There’s no denying that genuine, new demand has come forward to buy property in the past few months – not least from investors who are unhappy with low term deposit rates and can also now get into the property market with a 20% deposit rather than the previous 30%.

However, some of the strength in property sales volumes in the past few months is also likely to be some ‘catch up’ for the earlier weakness. Indeed, the cumulative total for the year to date in 2020 is still a touch below where it was in 2019, suggesting that to some degree there has been a shift of activity out of April/May and into the more recent months.

Looking ahead, the environment looks favourable for more solid levels of property market activity in the coming months. Admittedly, with the wage subsidy winding down, we need to be wary of the threat of higher unemployment. However, mortgage rates are low and potentially set to fall even further, so this points to support for property market activity levels and prices.

Source: CoreLogic

NZ AUK HAM TAU WE L CHC DUN0%

5%

10%

15%

20%

25%

30%

35%

40%

29 .7% 42 .0% 29 .0% 37 .7% 26 .7% 18 .6% 9 .7%

19

Values

After a lot of uncertainty from April to June about how property values might fare during the COVID phase and economic recession, that mood has turned more positive lately and indeed values themselves have generally continued to hold up across the country – primarily reflecting low mortgage rates and the tight supply/demand balance of property on the market.

In September, national average property values rose by 0.8% in the month, to stand at almost $744,000. That also left the three month change at 0.8% (values had held steady in July and August), and they’re currently 2.1% higher than six months ago. The annual change perhaps isn’t the most useful measure at present, given that it looks back to pre-COVID September last year, but for what it’s worth that figure is currently 7.6%.

On the whole, the performance of property values in the past few months has certainly defied the gloomy predictions from April/May and it would appear that the momentum for values is firmly upwards for now. That said, we shouldn’t get carried away – small falls in values couldn’t be ruled out if unemployment rises more sharply over 2021 than is currently envisaged, and borrowers rolling off mortgage payment deferrals perhaps find it tougher than they thought .

Average Value of Housing Stock - New Zealand ($)

2005 2008 2011 2014 2017 2020

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$ 7 4 3 , 6 7 8

Annual and Quarterly Change in Value (%)

2005 2008 2011 2014 2017 2020

-10%

-5%

0%

5%

10%

15%

20%

Annual Change %Quarterly Change %

38%

7 .6%

0 .8%Quarterly Change

Annual Change

5 Year Change $204,691

$52,281

$5,660

$743,678

20

House Price Index

The general resilience of national property values to COVID-related uncertainty, economic recession, and rising unemployment has been mirrored in each of the main centres.

In Auckland, average values have actually dipped a little in the past three months (-0.4%), but over a longer period are currently 1.2% higher than six months ago. Those rises have been driven by Franklin, Papakura, Waitakere, and Manukau, with Rodney, City, and North Shore a little softer (but still with values higher than they were six months ago).

Elsewhere, Hamilton and Wellington have been solid performers in the past few months, with

Average Dwelling Value ($)

2008 2011 2014 2017 2020$0

$200,000

$400,000

$600,000

$800,000

$1,000,000New ZealandAucklandHamiltonTaurangaWellingtonChristchurchDunedin

average values up by 3.2% and 1.7% respectively since June. Compared to a year ago, values in both those centres are up by around the 10% mark. Tauranga’s values edged down by 0.3% in September alone and have been flat since June. But continued growth over April to June means that values there are still 2.9% higher than six months ago.

In the South Island, both Christchurch and Dunedin have seen average values rise by around 1.5% since March. However, Dunedin’s values have been flat since June and there are signs that the previous strong upwards momentum in that part of the country has eased. That wouldn’t be surprising, given that a sustained upswing since around 2015 has seen housing affordability pressures emerge.

September 2020Current value 1 month 3 months 12 months 5 years

New Zealand $743,678 0 .8% 0 .8% 7 .6% 38%

Auckland $1,078,326 0 .5% -0 .4% 5 .0% 20%

Hamilton $647,777 0 .8% 3 .2% 9 .7% 56%

Tauranga $795,182 -0 .3% 0 .1% 6 .4% 58%

Wellington $797,196 1 .1% 1 .7% 11 .4% 74%

Christchurch $522,057 0 .5% 0 .7% 5 .0% 10%

Dunedin $547,429 0 .4% 0 .0% 15 .6% 81%

21

Annual Value Change (%)

Over a longer horizon of 12 months which includes both pre- and post-COVID phases, average property values have risen in almost all parts of the country, with strength most evident around Dunedin and Southland, as well as the central and lower North Island. Queenstown clearly stands out as hardest hit part of the country.

© 2020 Mapbox © OpenStreetMap

-9% 21%

22

Three Month Value Change (%)

Over the timelier three month (post-COVID) period since June, again there is stability or even further growth evident for average property values in most parts of the country. However, the most expensive parts of the country – i.e. Queenstown and parts of Auckland (namely City and North Shore) – have been a little softer.

© 2020 Mapbox © OpenStreetMap

-2% 5%

23

Rent

National rents averaged $444 per week in the three months to September, up by 3.3% from the same quarter a year earlier. There isn’t any widespread evidence of rents falling across large parts of the country, although it is looking clearer that the previous upwards momentum has slowed. Indeed, for most of 2019, rental growth was averaging more than 5% annually, so the slowdown to around 3% is quite marked.

Many of the main centres are still seeing solid demand for rental property and, with listings also relatively restrained, rents are holding firm (albeit growth rates have slowed). Auckland’s figure for the three months to September was 2.0% higher than a year earlier, with Christchurch at 2.5%. In Hamilton and Tauranga, average weekly rents are growing at rates of more than 4% per annum . Dunedin is still seeing growth too .

Outside the main centres, however, the trends are a little patchier. There are still hotspots in areas such as Gisborne (14.5% rise in rents in the past year), Invercargill (12.4%), and Palmerston North (11.5%). But there is clearer weakness for example in Carterton (1.4% decline in rents), Central Otago (-4.1%), and especially Queenstown (-16.7%). That illustrates the effects of the closed borders on our most tourism-dependent area, and translates into a fall in weekly rents from almost $590 a year ago to just $490 now.

Rental yields around the main centres range from 2.6% in Auckland up to 3.9% in Dunedin. With term deposit rates falling (and borrowing getting cheaper too), the rising presence of investors in the market shows that those property yields are starting to look increasingly attractive.

National Annual Change in Value and Rent (%)

Gross Rental Yield – National (%)

Med Weekly Rent Ann chg rent Gross yield

Auckland $533 2 .0% 2 .6%

Hamilton $405 4 .2% 3 .3%

Tauranga $502 5 .1% 3 .3%

Wellington $500 0 .7% 2 .9%

Christchurch $357 2 .5% 3 .6%

Dunedin $406 9 .4% 3 .9%

-15%

-10%

-5%

0%

5%

10%

15%

20%

2005 2008 2011 2014 2017 2020

Annual change in rentAnnual change in value

0 .0%

0 .5%

1 .0%

1 .5%

2 .0%

2 .5%

3 .0%

3 .5%

4 .0%

4 .5%

2005 2008 2011 2014 2017 2020

24

2005 2008 2011 2014 2017 20200%

10%

20%

30%

5%4%4%

10%

26%26%

21%25%

30%

25%

5%5%2%

12%

MoverFirst home buyer

Multiple property owner mortgageMultiple property owner cash

New to market ReEntry Other

Buyer Classification

The third quarter of the year saw a continued strong presence for first home buyers (FHBs) and mortgaged multiple property owners (MPOs, or investors) in the market, but existing owner-occupiers (movers) continued to sit on the sidelines in many cases.

Starting with mortgaged investors, their share of purchases rose from 24% in Q2 to 26% in Q3, the highest figure since Q3 2016 (which was just prior to the Reserve Bank introducing the 40% deposit requirement for investors). The low interest rate environment is having a two-way effect on investors – it’s cheap to borrow, so they’re actively seeking property because of that. But at the same time, low rates on term deposits are also creating an incentive to take money out of the bank and look for alternative asset choices, such as property. Indeed, the stock of money held in bank term deposits has actually fallen in recent months. Meanwhile, investor demand for property has also been stimulated by the temporary removal of the LVR speed limits, which has allowed more buyers to get in with a 20% deposit rather than the previous 30%.

The share of property purchases in Q3 made by first home buyers (FHBs) was 25%, up from 23% in Q2, and the highest figure in the history of our Buyer Classification series (topping the previous peak of 24% in 2006-07). In some cases, FHBs are accessing the property market by switching property type (e.g. standalone house to apartment) or looking at cheaper, more peripheral locations. However, FHB demand has also been boosted by would-be OE’ers who are now instead buying a house earlier than anticipated, as well as any returning kiwis who are also entering the property market without owning before. The upwards trend in KiwiSaver balances has also boosted deposits for some FHBs and gives them a small advantage over other buyer groups .

Looking at movers, their share of purchases dipped to just 25% in Q3, an historically low level. In some cases, existing owner-occupiers are choosing to stay where they are due to already high debt levels and the extra costs of moving house (such as legal, estate agent etc). But in other cases, people aren’t moving because they simply can’t find the ideal next property, given the tight supply of available listings. In turn, that is feeding back into an even tighter listings picture.

Looking ahead, it wouldn’t be a surprise to see these broad trends remain in place over the next few months, with investors and FHBs still remaining pretty active, but movers quieter.

Buyer Classification – New Zealand (% of sales)

NZ Property Transfers by Non-Citizens or no Resident Visa (% of total transfers)


0 .0%

0 .5%

1 .0%

1 .5%

2 .0%

2 .5%

3 .0%

3 .5%


25

Main Cities Housing Market Indicators

26

Auckland Market Activity

The composition of Auckland’s property purchasers in the last three months has broadly mirrored the national trends, with first home buyers and mortgaged investors showing a strong presence, but existing owner-occupiers (movers) not particularly active.

The share of purchases going to FHBs in Auckland in Q3 was 29%, up from 26% in Q2, and on a par with the previous peak back in 2006. As with the trends nationally, FHBs in Auckland are accessing the market via being willing to compromise on the property type or location, as well as using their KiwiSaver to fund the deposit .

Mortgaged investors also raised their share of purchases in Auckland in Q3, up from 26% in Q2 2020 to 28%. That’s the highest figure in around three years, and again reflects cheap borrowing costs, low returns on other assets, and also the ability to enter with a lower deposit than before.

Meanwhile, the activity from movers has plunged around Auckland in recent months, with their share of purchases only coming in at 20% in Q3. The lack of available listings will be a factor keeping more existing owner occupiers where they are, but there’s also a pretty clear trend for Aucklanders to want to renovate rather than relocating at present.

Around Auckland’s neighbouring areas, the mix of buyers is quite different in Northland, with movers accounting for the highest share of activity so far in 2020, at 29% (albeit only 27% in the Q3 alone). It’s also different to see that first home buyers have lost a little market share in Northland so far this year (although it did tick up in Q3), but in tune with the rest of the country, investors’ presence has increased over the past few quarters.

Buyer Classification – Auckland (% of purchases)

Buyer Classification – Northland region (% of purchases)

2005 2008 2011 2014 2017 20200%

10%

20%

30%




28% 29%28%

20%

11%

6%5%1%

27%27%

7%

4%

2004 2006 2008 2010 2012 2014 2016 2018 20200%

10%

20%

30%

40%

32%

21%

27%

21%20%15%

7%7%

2%

19%

12%

8%4%4%




27

Auckland Values

Average value of housing stock Auckland ($)

Annual and quarterly value change Auckland (%)

2005 2008 20202011 2014 2017

$1,100,000

$1,000,000

$900,000

$800,000

$700,000

$600,000

$500,000

$400,000

$300,000

$200,000

$100,000

$1,078,326

2005 2008 2011 2014 2017 2020

25%

20%

15%

10%

5%

-5%

0%

-10% 20%

5 .0%

-0 .4%Quarterly Change

Annual Change


$50,934

-$4,215


Generally speaking, average property values across Auckland have held up pretty well in this post-COVID phase, even though Auckland has obviously experienced more disruption than the rest of the country.

Over the past three months, Franklin and Papakura have seen values rise by about 2%, while Waitakere, Manukau, and Rodney have also seen continued increases, albeit at slower rates.

In the more expensive parts of Auckland, i.e. the old City TA (central area) and the North Shore, the past three months have been a little softer, with declines in average property values of 1.2% and 0.9% respectively. However, in September alone, both of those areas saw values rise, so the dips on a three-month basis reflect sluggishness in July and August – which may now have come to an end.

In broad terms, first home buyers and mortgaged investors tend to be more active in cheaper areas, while movers are more important in more expensive areas (where a higher amount of equity is required). This pattern for buyer types – with FHBs and investors generally busy at present; but movers quieter – would help to explain continued value gains in cheaper parts of Auckland, but a more subdued picture in the central city/North Shore

SEPTEMBER 2020Current value 1 month 3 month 12 months 5 years

Rodney $985,539 -0 .2% 0 .3% 4 .7% 29%

North Shore $1,235,527 0 .7% -0 .9% 5 .3% 17%

Waitakere $863,707 1 .0% 0 .7% 6 .2% 20%

Auckland City $1,262,799 0 .5% -1 .2% 3 .9% 19%

Manukau $945,550 0 .4% 0 .6% 6 .7% 24%

Papakura $740,029 0 .4% 1 .6% 6 .2% 30%

Franklin $711,065 0 .7% 2 .2% 5 .9% 28%

$1,078,326

28

Current Suburb Values: ‘Mapping the Market’Auckland suburb value change 2020 ($)

Generally speaking, property values around the country (except for Queenstown) have been more resilient since lockdown than was initially predicted. CoreLogic’s interactive ‘Mapping the Market’ product shows the changes over the past 12 months (covering a pre- and post-COVID phase), it’s freely available and updated quarterly. The heatmaps in ‘Mapping the Market’ are point-in-time snapshots of median values from 2019 and 2020, and show the % and $ change over that period too. See www.corelogic.co.nz/mapping-market

Auckland is illustrated in the heatmap here. As at September 2020, Herne Bay remains the highest priced suburb in Auckland, with a median property value of $2.71m. Auckland Central has the lowest median value (reflecting its concentration of apartments), at about $540,000. Only four suburbs have a median value <$600,000; 115 at least $1m (and four at least $2m).

30

Hamilton Market Activity

Hamilton’s Buyer Classification trends have also mirrored the national picture lately, but with the upswing in market share for mortgaged investors even more pronounced.

Indeed, in the third quarter of 2020, mortgaged investors accounted for 35% of property purchases in Hamilton, well above the national figure of 26% (which itself was pretty high). After easing lower throughout 2019, the market share for cash investors has also rebounded lately in Hamilton (currently 12%).

Meanwhile, first home buyers held steady at a 26% share of purchases in Hamilton in Q3. That’s pretty much in line with where the share for FHBs has hovered for about the last two years now, and certainly much higher than the trough of just 17% in Q3 2015 (when mortgaged investors were running at a rampant 40% share). Finally, the share going to movers fall away in Q3, and is now just 19%, a record low.

Around the wider Waikato region (excluding Hamilton), buyer classification patterns in Q3 saw movers’ share hold relatively steady (at about 32%), but FHBs and mortgaged investors edge higher – at the expense of cash investors (which fell from 17% in Q2 to 14% in Q3).

Buyer Classification – Hamilton (% of purchases)

Buyer Classification – Waikato region (% of purchases)

2006 2008 2010 2012 2014 2016 2018 20200%

10%

20%

30%

40%

31%27%

35%

26%

19%

12%

4%3%1%

25%

7%4%3%




20062004 2008 2010 2012 2014 2016 2018 20200%

10%

20%

30%

40%

31%

17%14%

32%

22%19%

14%

5%5%2%

25%

6%4%3%




31

Hamilton Values

Average value of housing stock Hamilton ($)

Annual and quarterly value change Hamilton (%)

2005 2008 2011 2014 2017 2020

$0

$600,000

$500,000

$400,000

$300,000

$200,000

$100,000

2005 2008 2011 2014 2017 2020

-10%

30%

25%

20%

15%

10%

5%

0%

-5%


56%

9 .7%


Annual Change


$57,277

$20,000

Hamilton’s average property values have been pretty strong in the past few months, up by 0.8% in September alone and by 3.2% since June. The level is now just short of $648,000.

The growth in September was pretty broad-based across Hamilton, albeit South East did see a small dip of 0.5%. But over a three-month horizon, all parts of the city have seen increases (ranging from 2.4% up to 3.7%), and looking on an annual basis South East and Central & North West are into double-digit gains.


Hamilton Central & North West

$608,988 2 .6% 3 .7% 12 .4% 57%

Hamilton North East $787,131 1 .4% 2 .6% 6 .9% 49%

Hamilton South East $601,129 -0 .5% 2 .4% 10 .1% 57%

Hamilton South West $580,378 0 .4% 3 .3% 9 .9% 59%

$647,777

32

Tauranga Market Activity

During the period from July to September, movers remained the key buyer group in Tauranga, accounting for 31% of purchases. The high market share for movers contrasts with all of the other main centres, and potentially illustrates how a solid base of equity/wealth (which movers have, either from having lived locally or bringing in equity from other parts of the country) is important in Tauranga, rather than necessarily local wages being a key driver for a property purchase.

Even so, both first home buyers and mortgaged investors increased their market share in Q3. For FHBs, the rise was from 17% in Q2 to 19%, and for mortgaged investors it was 23% to 25%. You have to go back almost three years for a time when mortgaged investors had a stronger presence in Tauranga than they currently have. Around the wider Bay of Plenty region (excl. Tauranga), mortgaged investors are also seeing a solid market share at present, with movers quieter.

Buyer Classification – Tauranga (% of purchases)

Buyer Classification – Bay of Plenty region (% of purchases)

2006 2008 2010 2012 2014 2016 2018 20200%

10%

20%

30%

40%

33%

23%

31%

25%

19%

15%

5%4%2%

16%15%

6%4%3%




2003 2006 2009 2012 2015 2018 2021

30%

27% 27%25%22%

14%

6%5%1%

18%

13%

6%4%3%

0%

10%

20%

30%

40%




33

Tauranga Values

Average value of housing stock Tauranga ($)

Annual and quarterly value change Tauranga (%)

2005 2008 2011 2014 2017 2020

$0

$800,000

$700,000

$600,000

$500,000

$400,000

$300,000

$200,000

$100,000

2005 2008 2011 2014 2017 2020

-10%

30%

25%

20%

15%

10%

5%

0%

-5%


58%

6 .4%


Annual Change


$47,689

$993

Tauranga’s average property values have lost a little steam since June, dipping by a minor 0.3% in September, which left them flat for the past three months. However, gains from April to June mean that they’re still 2.9% higher than in March, and 6.4% above a year ago. The average value in Tauranga is now $795,200.

Momentum remains stronger in other areas such as Rotorua (rise in average values of 5.2% since June) and Whakatane (2.0%), although the level of prices is still sub-$550,000 in both those markets.

$795,182

34

Wellington Market Activity

Across the four main territorial authorities in Wellington (City, Lower Hutt, Upper Hutt, Porirua), first home buyers remained the largest buyer group in Q3, accounting for 30% of property purchases. But mortgaged investors continued to close the gap, rising from a 27% market share in Q2 2020 to 29% in Q3. Porirua has been a key contributor to that rise, with mortgaged investors there accounting for 28% of purchases so far in 2020, up sharply from 24% in 2019.

Meanwhile, existing owner occupiers are very quiet around Wellington at present, accounting for just 20% of purchases in Q3, a new record low for the 15 year history of this series. As with other parts of the country, the tight supply of available listings is meaning that many would-be movers are instead just staying where they are, and potentially renovating (rather than run the risk of selling and not being able to find their ideal next home).

At a more detailed level, FHBs remain key in Lower Hutt (36% of purchases so far in 2020), while in Upper Hutt movers slightly retain the upper hand (33% share versus 31% to FHBs). Mortgaged investors and FHBs have close market shares in Wellington City (about 30% each), while there’s been a big rise for mortgaged investors in Porirua so far this year – up from 24% share in 2019, to 28% in 2020 to date. Over the hill, Masterton remains a movers market, as does South Wairarapa. Kapiti Coast has seen a rising market share for mortgaged investors this year, but movers still dominate.

Buyer Classification – Wellington (% of purchases)

Buyer Classification – Lower Hutt region (% of purchases)

2005 2008 2011 2014 2017 2020

30%

20%

10%

0%

27%27%

8%4%3%

2%4%6%8%

20%

29%30%




2004 2006 2008 2010 2012 2014 2016 2018 20200%

10%

20%

30%

40%

30%30%

25%

32%

28%

21%

8%5%

2%3%

5%4%3%




35

Wellington Values

Average value of housing stock Wellington ($)

Annual and quarterly value change Wellington (%)

$0

$800,000

$700,000

$600,000

$500,000

$400,000

$300,000

$200,000

$100,000

2005 2008 2011 2014 2017 2020 2005 2008 2011 2014 2017 2020

-10%

20%

15%

5%

-5%

10%

0%


74%

11 .4%


Annual Change


$81,456

$13,541

The wider Wellington property market has been resilient in recent months, with values having risen across the board since June – ranging from 0.6% in Masterton up to 5.0% in South Wairarapa. Kapiti Coast, Porirua, and Upper Hutt have all had gains since June of about 3% or more.

Perhaps reflecting the higher level of prices (almost $900,000) and tougher affordability, Wellington City itself has been a little more subdued in terms of growth, but 1.3% in the past three months and 8.7% over the past year are still relatively strong figures.


Porirua $710,763 2 .7% 2 .8% 16 .2% 87%

Upper Hutt $661,211 1 .5% 3 .4% 15 .1% 96%

Lower Hutt $697,171 1 .2% 1 .6% 14 .7% 87%

Wellington City $899,358 0 .6% 1 .3% 8 .7% 65%

Carterton $496,900 0 .8% 4 .2% 12 .9% 86%

Masterton $442,605 -0 .2% 0 .6% 11 .4% 90%

South Wairarapa $607,813 7 .3% 5 .0% 13 .0% 94%

Kapiti Coast $688,424 2 .4% 2 .8% 12 .3% 79%

$797,196

36

Christchurch Market Activity

Christchurch is seeing very similar Buyer Classification trends to the other main centres, with first home buyers and mortgaged investors active, but movers quiet.

Indeed, the market share for FHBs rose back from 25% in Q2 2020 to 28% in Q3 – pretty much as high as it’s ever been. Mortgaged investors have also continued their return from the lulls of 2018, and their market share rose to 26% in Q3, up from 24% a year ago. Movers’ market share in Christchurch was just 21% in Q3, a low only matched once before (in Q4 2013).

Around the wider Canterbury region, movers play a bigger role than in Christchurch itself, such as in Ashburton where movers have been 32% of activity so far in 2020 (albeit down from 38% in 2019). Timaru has also seen the movers’ market share fall so far in 2020 (36% in 2019 to 32%), with mortgaged investors more active. Meanwhile, Selwyn has seen movers’ share top 40% this year, no doubt reflecting to some extent existing owners (either from Selwyn or other parts of Canterbury) seeking out a new-build. A similar pattern has been seen in Waimakariri in 2020 so far too.

Buyer Classification – Christchurch (% of purchases)

Buyer Classification – Canterbury region (% of purchases)

2005 2008 2011 2014 2017 20200%

10%

20%

30%

40%

33%

24%23%

26%28%

21%

13%

6%

2%5%

8%4%4%




2003 2006 2009 2012 2015 2018 20210%

10%

20%

30%

40%

35%

22%

16%13%

19%

36%

22%

11%

6%

1%5%

6%5%3%




37

Greater Christchurch Values

Average value of housing stock Christchurch ($)

Annual and quarterly value change Christchurch (%)

2005 2008 2011 2014 2017 2020

$0

$500,000

$400,000

$300,000

$200,000

$100,000

-10%

35%

25%

15%

5%

-5%

30%

20%

10%

0%

2005 2008 2011 2014 2017 2020


10%

5 .0%


Annual Change


$24,767

$3,688

Christchurch’s housing affordability is better than each of the other main centres and although this may not necessarily set it up for immediate outperformance, it does help to explain a little about why values have been resilient to the recession. Across the city as a whole, average values now stand at $522,057, about 1.5% higher than six months ago. Each sub-market in Christchurch has also held up pretty well in recent months, and Selwyn and Waimakariri have also shown growth in the past three months (0.4% and 0.9% respectively).


Banks Peninsula $552,939 2 .9% 2 .6% 6 .6% 12%

Christchurch Central & North

$609,761 0 .3% 0 .4% 4 .8% 10%

Christchurch East $395,749 0 .7% 0 .7% 4 .6% 10%

Christchurch Hills $709,894 -0 .3% 0 .0% 4 .9% 11%

Christchurch Southwest $497,464 0 .9% 1 .1% 5 .0% 10%

Selwyn $569,967 -0 .1% 0 .4% 2 .5% 10%

Waimakariri $469,805 0 .7% 0 .9% 4 .1% 13%

$522,057

38

Dunedin Market Activity

Mortgaged investors remained a key buyer group in Dunedin in Q3, with 27% of purchases – more or less a record high. However, it was perhaps even more interesting that the share of purchases made by first home buyers also climbed to 27%, and the share for movers dipped to 26%. That is the first time in the 15 year history of this series that FHBs have had a higher quarterly market share than movers in Dunedin. Once again, the lack of listings is likely to be a key factor for why more owner occupiers are choosing to stay where they are .

Buyer Classification – Dunedin (% of purchases)

Buyer Classification – Otago region (% of purchases)

2005 2008 2011 2014 2017 2020

30%

20%

10%

0%

29%28%

20%

8%

4%7%

2%4%4%

9%

26%27%27%




2003 2006 2009 2012 2015 2018 2021

30%

20%

10%

0%

30%

23%

18%

15%

6%

3%5%

2%3%

8%

19%22%22%24%




39

Dunedin Values

Average value of housing stock Dunedin ($)

Annual and quarterly value change Dunedin (%)

2005 2008 2011 2014 2017 2020

$0

$500,000

$400,000

$300,000

$200,000

$100,000

-10%

35%

25%

15%

5%

-5%

30%

20%

10%

0%

2005 2008 2011 2014 2017 2020


81%

15 .6%


Annual Change


$73,727

-$102

Dunedin’s property values have lost a bit of momentum in the past 2-3 months, but it’s not universal across the city. Indeed, since June, Dunedin South and Peninsula & Coastal have seen average values rise further, but Taieri has been basically flat, and Dunedin Central & North has edged downwards.


Dunedin Central & North

$553,792 0 .2% -0 .9% 13 .6% 76%

Dunedin South $527,943 1 .8% 0 .5% 15 .1% 83%

Peninsula and Coastal $500,103 -2 .4% 1 .3% 15 .4% 83%

Taieri $575,491 -0 .1% -0 .1% 17 .4% 84%

$547,429

40

Suburb ScorecardDetailed housing market indicators down to the suburb level, with data in time series or snapshot and segmented in most cases across houses, flats and apartments. The Suburb Scorecard data includes key housing market metrics such as median prices, median values, transaction volumes, rental statistics and vendor metrics such as median selling time .

Market Share ReportsCoreLogic is in a unique position to monitor mortgage related housing market activity. Transaction volumes, dwelling values and mortgage related valuation events all comprise our Mortgage market report which provides an invaluable tool for mortgage industry benchmarking and strategy.

CoreLogic IndicesThe suite of CoreLogic Indices range from simple market measurements such as median prices through to our flagship house price indices – both quarterly for completeness and monthly for reactiveness. The Quarterly CoreLogic House Price Index has been specifically designed to track the value of a portfolio of properties over time and is relied upon by New Zealand regulators and industry as the most accurate measurement of housing market performance.

Sales VolumesCoreLogic tracks sales from a number of different sources to provide up to date insights on recent sale. Where applicable CoreLogic also applies estimation for expected final sales in recent months where not all sales have been collected.

.

Buyer ClassificationA unique and flagship product to CoreLogic, Buyer Classification classifies all purchases into types of buyer based on their current ownership of NZ property. Used at a record level by Government organisations to assist policy decisions. To view the latest report online and subscribe to receive it in your inbox on a monthly basis, visit: www.corelogic.co.nz/property-market-and-economic-update-report

If you would like to know more or obtain tailored data, analytics and insights for your business, please email us at [email protected] .

CoreLogic Data and Analytics

www.corelogic.co.nz/property-market-and-economic-update-report

www.corelogic.co.nz/property-market-and-economic-update-report

mailto:reports%40corelogic.co.nz?subject=

41

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© Copyright 2019. CoreLogic and its licensors are the sole and exclusive owners of all rights, title and interest (including intellectual property rights) the CoreLogic Data contained in this publication. All rights reserved.

Data & Research publicationsWhilst all reasonable effort is made to ensure the information in this publication is current, CoreLogic does not warrant the accuracy, currency or completeness of the Data and commentary contained in this publication and to the full extent not prohibited by law excludes all loss or damage arising in connection with the Data and commentary contained in this publication.

You acknowledge and agree that CoreLogic does not provide any investment, legal, financial or taxation advice as to the suitability of any property and this publication should not be relied upon in lieu of appropriate professional advice.

Published date: Quarter 3, 2020

Quarterly Property Market & Economic Update · 2020. 12. 1. · CoreLogic helps clients identify...

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