Regional Property Updates

NZ property finance

Fifo Capital stays connected with property experts and New Zealand economists, including the renowned Tony Alexander, known for his valuable insights. Tony, often sought by top news agencies and business owners, collaborates with First Mortgage Trust monthly to create “Regional Property Insights.” We leverage these insights in our business, summarising key points for each NZ region below while providing NZ property finance options.


Northland: A strong price run

The Northland property market has experienced robust growth in house prices since 2016, with a brief pause in 2021. The three local authority areas in Northland, including Kaipara District, show prices above the national average. The region’s housing market is influenced by Auckland’s strengthening market. Additionally, Northland is poised to benefit from retiring Baby Boomers, with potential contributions from Gen X starting around 2030 or possibly sooner.

Auckland: Catch up due

After surging post the Global Financial Crisis of 2008-09, Auckland house prices remained relatively flat from 2017-19 while the rest of the country experienced growth. During the pandemic, Auckland’s price increase was less significant than in other parts of New Zealand. However, recent times have seen house prices in Auckland outpace most of the country, boosted by a migration boom. This trend is expected to continue until 2024, potentially bringing Auckland’s average price closer to the long-term trend.

Bay of Plenty: Some areas stretched

Bay of Plenty witnessed an above-average increase in prices until recently. Currently, prices are aligning with the national average, with the potential for underperformance due to the deviation from the established trend.

Waikato: Correction underway

A relative correction is in progress, as average house prices in Waikato continue to stay above average levels. Certain territorial authority areas, such as Otorohanga, South Waikato, and Waitomo, display prices significantly exceeding trend levels.

Gisborne: Correction one day

A potential correction looms in the future. Gisborne’s house prices experienced a significant surge relative to the entire country from 2016 to 2021. While they have closely followed the national trend since then, there is a current susceptibility to increases in city prices driven by the migration boom. Factors contributing to this vulnerability include the reversal of some pandemic-induced internal migration effects and cautious sentiments following recent climate events. There is a remarkable surge in prices relative to the national average, particularly noticeable in Taupo.

Hawke’s Bay: High price vs. trend

Hawke’s Bay, which had been experiencing a period of outperformance, saw this trend come to an end in 2022. The current concern revolves around the extent to which the shift in relative population growth rates, coupled with low export prices and the influence of El Nino, might temporarily lag the region in terms of imminent price appreciation. Napier seems to be well into its correction in relative prices. On the other hand, Hastings shows no signs of correction, potentially influenced by internal migration related to the retirement of Baby Boomers.

Manawatu-Wanganui: Mild correction

The degree to which average house prices in the Manawatu-Wanganui region surpass the established trend has been gradually diminishing over the past couple of years. It is reasonable to anticipate this somewhat below-average price performance to persist. The most pronounced relative price correction has been observed in Ruapehu District.

Taranaki: Good affordability

Taranaki experienced a considerably lower relative increase in residential property prices compared to all other non-Auckland North Island regions from 2017. Consequently, the motivation for correction is relatively modest. However, given the region’s unlikely prospect of benefiting from the migration-driven population growth seen in the major urban areas of New Zealand, there may still be some limited degree of price underperformance. Despite being relatively affordable, first home buyers are expected to prioritise this aspect more prominently in about a year. Notably, New Plymouth City does not exhibit any indications of long-term overpricing.

Wellington: Price correction ended

Wellington is currently at the forefront of the house price cycle. Not only have listings decreased by 30% compared to a year ago, but prices also do not surpass the established trend, a deviation from the situation in most other non-Auckland regions. In the Wellington region, no territorial authority exhibits prices significantly above the trend.

Tasman, Nelson, and Marlborough: No correction needed

The three unitary authorities in the top of the South Island did not undergo a surge in prices compared to the rest of the country, especially Auckland, from 2016. There is no significant indication that they are poised for a correction, with Tasman, in particular, showing little to no signs of such adjustment.

West Coast: Not overpriced

House prices on the West Coast of the South Island exhibited significant growth compared to the rest of the country during the pandemic. However, no specific territorial authority appears to be at significant risk of experiencing a substantial price correction. The migration boom is expected to exert additional pressure on prices in the cities, while the upturn in tourism is likely to have a positive impact on West Coast house prices. A relevant factor will be the extent to which house prices in Christchurch rise in the next couple of years, as strong growth may prompt young buyers to consider options such as the West Coast.

Canterbury: Still looking firm

Considering the potential downward bias introduced by the effects of the 2011 earthquake, there is room for Canterbury, particularly Christchurch City, to exhibit outperformance in the early stages of the current upward house price cycle.

Dunedin City: Little correction

Similar to much of the rest of the South Island, Dunedin’s prices do not appear significantly deviated from the long-term trend. However, limited potential for outperformance, and the impact of booming inward migration elsewhere may result in the city trailing in this cycle, only to catch up later for affordability reasons. With perhaps a minor exception in the Clutha District, no other part of Otago seems to be vulnerable.

Queenstown Lakes: Firmly supported

Basing decisions on the concept of prices relative to trend in the Queenstown Lakes District is likely more risky than in any other part of the country. Specific and potent factors, such as fluctuations in internal migration tied to demographic trends, pandemic impacts, variations in the international visitor market, changes in foreign property ownership regulations, and standard economic factors like interest rates, economic growth pace, and business profit growth, strongly influence the residential real estate market in the district.

Despite these significant caveats, well above average price growth in the district has been experienced since 2021 with no apparent indication of this relative outperformance coming to an end. In the past year, the Queenstown District’s population has grown over 8%, compared to 2.1% for all of New Zealand. While this growth rate is expected to slow with borders reopening and tourism returning, constraints on construction, including rising costs and low labor availability, suggest another period of supply growth falling below housing demand growth.

Price prospects for the area remain positive, but the high cost of entry into the housing market in Queenstown Lakes is notable by New Zealand standards.

Southland: Mild correction one day

Since 2017, the Southland region has consistently exhibited a relative pace of price increase above the New Zealand average, and there is currently no clear indication of this trend changing. In the past, the region has deviated further from the trend than the present situation. Consequently, while the likelihood suggests a relative correction, the persistence of momentum, driven by factors such as investors seeking yield, may keep some relative strength in play for an extended period.

Potential buyers and sellers in the region must navigate three key issues: the additional strength from the tourism sector’s recovery, strength in other areas due to migration inflows that may not positively impact Southland to the same extent, and the challenge of low incomes in the farming sector for a while. Despite potential negative effects elsewhere from El Nino on farm income, the region has historically demonstrated a tendency not to be as severely affected as the eastern coasts of the North and South Islands.

All three districts in the region exhibit prices above the trend, although not necessarily by a significant margin.


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