Nick Goodall: Provinces' time to shine

The QV House Price Index' newly released July edition sees the average value of properties in our provincial centres continuing to grow at 2.9 per cent quarterly. Photo / 123RF

By Nick Goodall

With so much focus on the current slowdown in Auckland and other main centres, we don't often get to concentrate on what's happening in our provincial property markets. But it's these areas that have the strongest stats now so today is their time to shine. Let's take a look.

The QV House Price Index has some useful geographic groupings across NZ and the newly released July edition sees the average value of properties in our provincial centres continuing to grow at 2.9 per cent quarterly.

This is much stronger than the 0.8 per cent quarterly growth in our six main cities.

The difference in average value between these two groups - ($457,000 in the provinces, compared to $753,000 in our main centres) - provides an indication of partly why this might be - affordability.

Within this provincial grouping, the top three areas for quarterly growth are Napier City (5.7 per cent), Queenstown Lakes District (4.9 per cent) and Kapiti Coast District (4.6 per cent).

Different factors are affecting each area, from tourism to improved transport links to better business opportunities - but ultimately, strong local economies have driven demand to outstrip supply, paving the way for rising prices.

This is evident pretty much countrywide, especially in the North Island, where Gisborne (4.6 per cent), Whanganui (4.0 per cent), Hastings (3.7 per cent) and Whangarei (3.4 per cent) all exceed 3 per cent quarterly growth.

Does this mean we should all flock to the smaller areas for property investing gold? Not exactly. Sales volumes have dropped in these centres as well as in the main cities, especially when compared to last year, so it's unlikely this growth will be maintained.

CoreLogic has a unique measure of market activity which also shows a more recent decline in demand to purchase property in these areas, so that will lead to a drop in sales and subsequent pull back in price rises.

Meanwhile, returning to Auckland just briefly: it's the outer areas that are seeing the greatest drop in values.

Papakura tops (or bottoms) the list with a -2.6 per cent drop in the past three months and Franklin is only slightly better at -1.6 per cent.

Waitakere (-0.9 per cent), Rodney (-0.7 per cent) and Manukau (-0.5 per cent) around out the poorest performing Auckland areas.

The other major city to see such a widespread drop is the Canterbury region where Waimakariri District saw a -1.5 per cent drop and Christchurch City continued its gradual slide, down -0.2 per cent in the past three months.

So what to make of it all? Areas of NZ are all at slightly different phases of the property cycle, but across the board - whether metro, urban, provincial or rural: it's clear that the growth phase of the past few years has peaked.

What will be interesting to now watch is how each area responds to the slow down in market activity, with local economic factors having a greater role in determining results.