CoreLogic research analyst Kelvin Davidson writes:
The general picture of rising residential property values in the North Island (ex Auckland) over the past year but softer trends in the South Island is evident at a suburb level. Amongst the top 10 suburbs for property value growth in the past year, eight are in the North Island, with only Clifton (Invercargill) and Otematata (Waitaki) representing the South Island. The concentration of the top 10 is also in the lower North Island, with Waitangirua, Cannons Creek, Ranui (all Porirua), Featherston, Greytown and Martinborough all recording growth of at least 18% in the past 12 months.
Relatively low property values – and better affordability – will have played a role in the faster growth over the past year. Apart from Greytown ($595,950) and Martinborough ($524,000), each of the suburbs shown in the first chart has a median value of about $400,000 or less. Clifton is less than $200,000.
Turning to the worst performers (shown in the second chart), they are also pretty easy to categorise. Nine of the bottom 10 suburbs for property value changes over the past year are either in Auckland or Christchurch (and the tenth, Rakaia, isn’t far from Christchurch). Affordability is clearly a problem in Auckland in general and this is likely to have affected higher-priced suburbs such as Flat Bush and Schnapper Rock. Meanwhile, weakness in Hei Hei, Islington, Beckenham and Aranui in Christchurch may reflect some buyers wanting to target newer and/or more earthquake/flood-resilient properties in other suburbs.
It is also interesting to see that turnover rates have tended to be higher in the suburbs where value growth has been strongest. As the fourth chart shows, seven of the top 10 suburbs (shaded red on the left of the chart) have had at least 6%* of their houses change hands over the past year. Kawerau, Featherston, Greytown, Putaruru and Martinborough were close to 10% or above. By contrast, most of the slow-growth suburbs in grey on the right of the chart had lower turnover rates.
Broader explanations for different patterns in suburb-level property value trends become difficult, given that local factors are so important in smaller markets. That said, the strength in values around the lower North Island (e.g. suburbs in Porirua and South Wairarapa) has partly reflected first-home buyers being pushed out of Wellington city and looking further afield. Anecdotally, Greytown has also become a ‘trendy’ place to live and demand from out-of-towners to buy property has increased significantly. Better commute times (or at least the prospect of them in future) and scope to work remotely will have also helped support property values in Porirua and South Wairarapa.