According to the CoreLogic QV January 2020 House Price Index, property values rose by 0.7% during January, with the annual rate of growth increasing to 4.4%. That’s a further strengthening from the end of December 2019 which saw 4.0% growth over the year.
Property values strengthened in each of the six main centres as well as most of the main urban areas – particularly in those areas with lower average values. Property values in Gisborne grew by more than a quarter (25.7% or $83,000) over the last 12 months, to take the average property value over $400,000 for the first time. Property investors accounted for 38% of sales in the final quarter of 2019.
In Tauranga, property values continue to grow, however at the much lower rate of 6.6% in the last year. The higher average value of $770,000 impacted on affordability.
According to this measure Tauranga is the most unaffordable city in New Zealand.
Part of the reason Tauranga ranks so lowly for affordability, says Core Logic, is because of the larger population of retirees based there, which translates to a lower income on paper and often greater equity in their own home. In 2019 a total of 8.0% of residential sales went to people from Auckland. For comparison only 4.0% of residential sales in Napier went to the same group. In Tauranga this share peaked in 2016 at 17.8% of sales.
Many of these buyers will have accessed equity in properties owned in Auckland to assist with their purchase in Tauranga, meaning the size of their mortgage remains low.