Best of the Best 2020 2020 in Review and What 2021 Might Have in Store Table of Contents
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Best of the Best 2020 2020 in review and what 2021 might have in store Table of Contents About CoreLogic . 3 National top performing suburbs 2020 . 6 National top 10 . 7 Auckland . 9 Hamilton . 12 Tauranga . 15 Wellington . 18 Christchurch . 21 Dunedin . 24 In summary . 27 2 About CoreLogic CoreLogic is a leading property information, analytics and services Contact provider in the United States, Australia and New Zealand. CoreLogic Call us 0800 355 355 helps clients identify and manage growth opportunities, improve performance and mitigate risk, by providing clients with innovative, Wellington office technology-based services and access to rich data and analytics. Level 1, 131 Willis Street PO Box 4072 Wellington 6140 Copyright & Disclaimer Auckland office Level 5 This publication reproduces materials and content owned or 41 Shortland Street licenced by CoreLogic NZ Limited (CoreLogic) and may include data, Auckland 1010 statistics, estimates, indices, photographs, maps, tools, calculators Email: [email protected] (including their outputs), commentary, reports and other information (CoreLogic Data). © Copyright 2020. CoreLogic and its licensors are the sole and exclusive owners of all rights, title and interest (including intellectual property rights) subsisting in this publication, including any data, analytics, statistics and other information contained in this publication. All rights reserved. While CoreLogic uses commercially reasonable efforts to ensure the CoreLogic Data is current, CoreLogic does not warrant the accuracy, currency or completeness of the CoreLogic Data and to the full extent permitted by law excludes all loss or damage howsoever arising (including through negligence) in connection with the CoreLogic Data. corelogic.co.nz 3 The year that’s been Clearly 2020 has brought events that none of us could What about the various buyer groups? This time last have expected, including the strong post-lockdown year we speculated that 2020 could be the ‘year of the rebound in the housing market. That certainly didn’t investor’, and although the circumstances have been seem likely back in April/May, when sales activity very different to what we (or anybody) envisaged, that collapsed and prices were looking fragile. In fact, the call has proved to be pretty accurate. Indeed, property upswing has been so swift that the political mortgaged investors’ market share has continued to pressure has already ramped up to levels that would rise in recent months (27% in October), due to the have taken far longer to get to in previous cycles. The removal of the LVRs, low returns on savings in the Reserve Bank has not escaped scrutiny either. bank, and also how cheap it is to borrow to buy property. But first home buyers have also been very But first things first, what’s actually happened this year? active, with their share of purchases hitting 25% in Q3, Thinking back pre-lockdown, there were already signs a record high. that sales activity and prices were strengthening, with mortgage rates edging lower and the stock of property In terms of the actual sales numbers, then, it’s actually listed/available to buy at historical lows. Of remarkable to think that (despite the lack of listings and course, then COVID hit, and the Government injected a the ban on activity in lockdown) the total volume of huge amount of money into the economy (primarily the transactions this year is on track to be about 85,000- wage subsidy), while the Reserve Bank (e.g. delayed 90,000, the same as 2019 (and similar to the long-term capital requirements, removal of loan to value ratio average). Meanwhile, the rise in average property rules, quantitative easing) and the trading banks values for 2020 as a whole could be in the vicinity of themselves (e.g. mortgage payment deferrals) also 9-10% – pretty remarkable when measured against played a huge role in helping businesses and some forecasts made during lockdown that prices households to negotiate those tumultuous months could fall by 15-20%. over April, May, and into June. 4 The year ahead It’s fascinating how quickly the property market has now be less than 6.5% – a far cry from lockdown become political in recent weeks, and although the forecasts that it could reach 10%. Similarly, after Finance Minister’s public letter to the Reserve Bank peaking at more than $22bn in May, the value of Governor (and his subsequent reply) may not drive mortgages with a deferral in place has already dropped immediate change to the RBNZ’s official policy targets, markedly to less than $4bn. Again, those ‘exits’ from it does demonstrate that it might not be plain sailing the scheme don’t appear to have been too stressful. for the property market in terms of regulatory measures in 2021. Indeed, there’s already speculation Overall, provided COVID continues to be managed emerging about an extension to the Brightline Test (a successfully, it’s hard to see the property market being capital gains tax that currently applies if an investor seriously thrown off its current course in 2021. For sells a property within five years), while debt-to-income sure, housing (un-)affordability will remain an issue ratios for new mortgage lending are also rearing their between the ‘haves’ and ‘have-nots’, but the key drivers head too. for the market that we’ve seen this year seem likely to remain in place next year – e.g. low mortgage rates and Meanwhile, the reinstatement of the LVR speed limits a tight supply of listings. After all, many would-be on 1st March seems to be a done deal, with the banks movers are sitting tight (therefore not listing their own having already made the move anyway. This won’t property), few investors are actually selling to make affect owner-occupiers too much (they’ll just continue their next purchase, while first home buyers obviously to require 20%), but some investors could be frozen don’t sell anything either. That all amounts to further out by now having to find a 30% deposit rather than restraints on listings volumes. 20%. However, with general demand still so strong, it seems unlikely that the return of the LVR rules will be a Our central assumption is that property sales volumes game-changer. Of course, as we saw back in 2016, in 2021 will be similar to 2020 (again in the range of pushing investor deposit requirements back up to 40% 85,000-90,000), as low mortgage rates support activity could be more significant – and while it doesn’t seem to but low migration flows provide a dampening effect. be on the table at present, that couldn’t be ruled out if For property values, it wouldn’t be a surprise to see market momentum remains strong. another increase in the range of 5-10% next year. However, 2020 has taught us that nothing can be taken Other concerns that have been lingering for a while for granted, and no doubt there’ll be plenty of twists about how the end of the wage subsidy and mortgage and turns in store for 2021. deferrals might affect the property market seem to be less relevant now. After all, the wage subsidy has already ended without any real fuss, and although the unemployment rate has risen to 5.3%, the peak could 5 National Top Performing Suburbs 2020 The Best of the Best report is a suburb level analysis of a variety of measures used by CoreLogic to determine property market performance across the year, ranging from property value growth to rental yields. National Top Performing Suburbs 2020 TOP SALE PRICE ALL RESIDENTIAL PROPERTY 7 Rarere Road, Auckland $12,250,000 HIGHEST MEDIAN VALUE HIGHEST GROSS RENTAL YIELD Herne Bay, Auckland $2,681,650 Runanga, Grey 10 .3% LOWEST MEDIAN VALUE LOWEST GROSS RENTAL YIELD Runanga, Grey $150,950 Omaha, Auckland 1 4%. GREATEST 12 MONTH CHANGE IN MEDIAN VALUES 3 BED HOUSE - HIGHEST RENT 12 MONTH CHANGE Outer Kaiti, Gisborne 39 .7% Whakatane – Whakatane Rural 43 .4% LOWEST 12 MONTH CHANGE IN MEDIAN VALUES 3 BED HOUSE - LOWEST RENT 12 MONTH CHANGE Lake Hayes, Queenstown -10 9%. Queenstown Lakes – Queenstown Central -29 9%. GREATEST 5 YEAR CHANGE IN MEDIAN VALUES SHORTEST DAYS ON MARKET Kawerau, Kawerau 200 .7% Heidelberg, Invercargill 7 LOWEST 5 YEAR CHANGE IN MEDIAN VALUES LONGEST DAYS ON MARKET Avonhead, Christchurch 0 .3% Port Waikato, Waikato 207 • All data highlighted is current to November/December 2020. • Median value data based on the middle value of all automated valuations across the suburb. Suburbs shown here are only those where the model had enough comparable evidence to provide a meaningful estimate of current value. • 12 month change The percentage difference between the median AVM value in the same period compared 12 months ago. • Five year change The percentage difference between the median AVM value in the same period compared 5 years ago. • Gross rental yields are calculated using MBIE data on rental bonds lodged. Median weekly rents are multiplied by 52 to get an annual figure, which is then divided by that suburb’s median property value. • Days on market is how long it takes for a property to sell from first listing to sale date. Suburbs covered for this measure must have at least 200 dwellings and have had 20 sales in the past year. 6 National Top 10 Highest median value Lowest median value # Suburb Median value # Suburb Median value 1. Herne Bay $2,681,650 1. Runanga (Grey) $150,950 2. Saint Marys Bay $2,312,150 2. Cobden (Grey) $159,250 3. Remuera $2,167,100 3. Blaketown (Grey) $168,800 4. Stanley Point $2,090,800 4. Wairoa (Wairoa) $192,850 5.