House Price Index justifies initiative
Many organisations have criticised the government’s new housing package that aims to tip the market balance in favour of first-home buyers (FHBs). However, CoreLogic has supported the government’s move, with its latest House Price Index (HPI) revealing why.
The HPI showed continued value growth through March – with a 2.2% increase in values nationwide, taking the annual growth rate to 16.1%, the highest since January 2006.
The granular index data revealed growth in Tauranga, which showed some weakness in the prior month’s results. Monthly growth across Tauranga of 2.5% fully reversed the dip in February, with values now up 2.4% over the last three months.
The provincial centres’ data revealed further strength around the country, with the main surprise being the (-2.4%) monthly drop in average value in Gisborne, previously the standout area due to prolonged. strong growth. However, market fatigue may now be setting in, with the average value of $531,000 stretching affordability in our eastern-most city.
Auckland’s average property value increased by 1.7% in March, Christchurch by 1.9%, and Dunedin by 1.6%. Meanwhile, Wellington’s property values spiked higher again in March, with each of the main submarkets seeing increases of at least 3%.
CoreLogic head of research Nick Goodall (pictured) pointed out that the prolonged period of value increases justifies the government’s recent housing announcement. Despite the market being tipped further in the balance of FHBs, he said they are not expecting a significant exodus or pull back from investors.
“The long-term appeal of property investment remains – using debt to access a valuable asset and having ‘someone else help pay off your mortgage’ in a bid to provide passive income and wealth in retirement. The Prime Minister’s continued commitment to protecting the value of that asset should also provide confidence to current owners and future buyers,” he continued.
“Longer term, the appeal is likely to shift towards new builds. If this is the case, it should provide a variety of benefits, including increased investment demand for newly built homes, as well as a boost to housing supply, which remains scarce. A key constraint on new construction remains in the form of the industry being at or near capacity, both for materials and labour, as the current timber shortage is clearly illustrating, and our closed borders are exacerbating.”
