Latest figures emphasise how “overheated our residential property market has become”
The most significant capital gains this quarter were recorded in Queenstown and Auckland as increased price pressure hit the New Zealand residential property market, according to the latest Quotable Value (QV) Quartile Index.
The report, which tracks residential property prices and sales at the upper and lower ends of the market, showed that the average house price in the upper quartile in Queenstown increased by $206,431 in only three months.
Auckland’s Rodney district and central suburbs took second and third place, where the average house price in the upper quartile increased by $199,475 and $199,246, respectively.
QV general manager David Nagel commented: “In just three months, the most expensive houses in these parts of Auckland and in Queenstown have made more than twice as much as the average Kiwi household will in a year. It’s an absolutely huge amount of money and just another example of how overheated our residential property market has become.
“We tend to spend so much time focussing on the lower end of the market, the first-home buyers and investors, that sometimes it’s easy to lose sight of the market as a whole. The people in the upper quartile of the market are just as vulnerable to a market correction as anyone else – and possibly even more so.”
However, the upper quartile in the larger Wellington region had the most significant house price rises as a percentage: Upper Hutt (14.4%) and on the Kapiti Coast (13.2%) – and at the lower quartile level in Invercargill (12.5%).
Meanwhile, Christchurch was the largest urban centre in the country with more activity at the upper end of the market than at the lower end. The same was also true of Napier, Hastings, New Plymouth, Palmerston North, and Nelson.
“Now that we’ve established this baseline of activity across the entire country, it’ll be very interesting to map out the effect that this week’s suite of policy changes, announced on Tuesday, will have on the market in next month’s QV Quartile Index and the ones after that,” Nagel said.
“There is still plenty of competition between first-home buyers and investors, but with the extension to the bright-line test from five to 10 years, as well as the changes to interest deductibility for property investors, we’ll likely see a swing toward first-home buyers in the coming months.”
