Whilst NZ’s regional areas are actually the strongest current property market performers with the highest annual rates of growth, the problem is that the rates of growth are slowing and there’s a very uncertain outlook.
Only four of twelve main urban centres (outside the six largest cities of Auckland, Hamilton, Tauranga, Wellington, Christchurch and Dunedin) saw annual growth actually increase in the latest June data: Whanganui, Invercargill, Palmerston North and Rotorua.
Napier holds onto the top spot with the greatest rate of annual growth at 15.7%, but it’s a bittersweet win, because the value growth has also dropped two months in a row after sitting at 17.6% at the end of April 2018. The Art Deco capital’s dream run could indeed be coming to an end - with consistently strong annual growth exceeding 15% for the last two years, and an average value exceeding $510,000 unaffordability will be starting to have an impact - especially with credit remaining tight.
Whanganui comes in second with annual growth of 12.6% and an average value of $255,020 - yes, that’s right! Under $300K: a figure obviously appealing to both owner-occupiers and investors.
Looking to other main urban areas with average property values under $500,000 now: Invercargill ($265,151), Palmerston North ($391,599) and Rotorua ($427,132) all saw a lift in annual value growth from May to June. Gisborne ($311,304) saw annual growth slow from 10.1% to 8.9% over June and Hastings ($455,678) followed suit, slowing from 12.5% end the end of April to 8.5% at the end of June.
New Plymouth is an interesting case study right now. Values there continue to slow, with the average property value hitting $450,000 at the end of June. Goodall comments: “The oil/gas and dairy industries are strong in Taranaki, and both are facing their own challenges. We’re waiting to see the impact on the local property market from the Government’s recent announcement of no new oil and gas exploration permits being granted, plus the challenge of NZ’s mycoplasma bovis infection and influence on both dairy trade and NZ’s ‘100% pure’ branding”.
Lastly, let’s look at another variable impacting regional outlook: Migration.
This is a complicated variable to analyse, but the historical data indicates that the provincial areas tend to lose people at the greatest rate when the country as a whole is experiencing weak net migration. As Goodall explains: “With the current decline in NZ’s net migration flows tipped to continue (including the balance with Australia), provincial areas could definitely feel the pinch more acutely than in the cities”.