It’s hard to believe we’re almost three quarters of the way through the year already. Perhaps it was the relatively mild winter we had in Wellington that makes it a surprise we’re in spring already but here we are. 

The anticipation of spring is always a great time to review where we’re at in many ways, not least the property market. A property market headline isn’t often hard to come by (even with the Rugby World Cup on) but where do we see things at?

Sales activity was relatively muted in August after an unseasonably strong July. On a 12 month rolling basis, sales volumes were down 3.3% year on year, but activity has effectively plateaued out at the current level. 

We’re reporting just over 85,000 residential sales across the country in the last year, with 22,500 of these in Auckland. This is well down on the recent peak of 113,000 nationwide at the end of June 2016 and almost 40,000 in Auckland in the year to the end of September 2015.

Limited listings are playing their part in restricting the number of sales and this also means we’re still seeing property value growth in areas where there’s a real dearth of property for sale. 

While demand may have reduced over the last few years, so too has supply and that means some markets still remain relatively competitive and hence values get pushed up.

This is not the case in our two largest cities with property values in Auckland still tracking down -2.3% over the last year according to the QV House Price Index - which is the best long term measure of property value change. And in Christchurch values continue to effectively track sideways – up only 0.4% over the last year. 

Dunedin remains the best performing main centre with almost 12% growth over the last year, and our provincial centres have also retained relatively higher rates of growth.

It is worth noting though, that these rates have slowed over the last two years, and it’s certainly not one size fits all. Values in Queenstown, Whangārei, New Plymouth, Nelson and Kapiti Coast have all seen less than 8% growth over the last year with both Queenstown and Whangārei actually below 3%.

Higher average values in some of these areas impact affordability, with incomes previously not able to keep up with property value growth and tighter lending criteria over time restricting the potential buyer pool. This lending criteria includes the well-known deposit requirements, but also stricter expense assessment and serviceability interest rates.

Interestingly though, towards the end of August we heard serviceability interest rates had been reduced, and given our belief that it was these rates which were limiting the number of potential buyers, I’d expect this to translate to higher buyer demand throughout this month, and into next. Competitiveness amongst the banks remains high which is a good thing for consumers.

The other big piece of news to come out this month was of course from Minister Megan Woods and the much heralded KiwiBuild reset, or what’s now called the Government Build Programme. 

Unsurprisingly, the build targets were scrapped, although the Minister reaffirmed the Government’s commitment to working with developers to build more affordable, high quality, starter homes. And also doing this by transforming how we build – especially by embracing and driving the use of modular or pre-fabricated building options.

But the bigger focus was on “helping more households become homeowners” through reducing deposit requirements, improving the eligibility criteria for housing grants and reducing the restrictions on buyers.

Ultimately, the policies announced will likely do more for increasing demand than supply, especially in the short term. So if anything this further underpins the solid outlook for the property market. 

We’re expecting to see a bit of a lift in sales volumes for the rest of this year and into next and as is often the case, this should translate through to growth in values across most of the country (albeit at a slower rate than the last few years). Auckland is the big exception to this, where the conditions of the last few years, which have led to flat-to-reducing values, look set to remain consistent.