Quarterly Property Market & Economic Update

New Zealand | COVID-19 special edition Quarter 2, 2020 Table of Contents

About CoreLogic...... 3 Executive Summary...... 4 Macro Economic and Demographic Indicators...... 5 New Zealand Asset Classes...... 6 New Zealand and Australia GDP Growth...... 7 New Zealand Population and Migration...... 8 Regional Building Consents...... 10 Consumer Confidence...... 10 Employment ...... 11 Interest Rates ...... 12 Housing Overview...... 13 Early Property Market Indicators ...... 14 Listings...... 15 Lending conditions...... 17 Sales Volumes...... 18 Nationwide Values...... 19 House Price Index ...... 20 Rent...... 23 Buyer Classification...... 24 Main Cities Housing Market Indicators...... 25 Auckland Market Activity...... 26 Auckland Values...... 27 Current Auckland Suburb Values ...... 28 Hamilton Market Activity...... 30 Hamilton Values...... 31 Tauranga Market Activity ...... 33 Tauranga Values...... 33 Wellington Market Activity...... 34 Wellington Values...... 35 Christchurch Market Activity...... 36 Greater Christchurch Values ...... 37 Dunedin Market Activity...... 38 Dunedin Values...... 39 CoreLogic Data and Analytics ...... 40 Legal Disclaimer...... 42

2 About CoreLogic

CoreLogic is a leading property information, analytics and Contact services provider in the United States, Australia and New Zealand. Call us 0800 355 355 CoreLogic helps clients identify and manage growth opportunities, improve performance and mitigate risk, by providing clients with Wellington office innovative, technology-based services and access to rich data Level 2, 275 Cuba Street and analytics. PO Box 4072 Wellington 6140 Whilst all reasonable effort is made to ensure the information in this publication is current, CoreLogic does not warrant the accuracy, Auckland office currency or completeness of the data and commentary contained in Level 5 this publication and to the full extent not prohibited by law excludes 41 Shortland Street all loss or damage arising in connection with the data and Auckland 1010 commentary contained in this publication. Email: reports@corelogic .co .nz

corelogic.co.nz 3 Executive Summary COVID-19 special edition

It’s obviously been an unprecedented year for the to undermine the property market . At the same economy and property market so far in 2020, and time, the normal seasonal rise in listings will be unfortunately we’re not out of the woods yet. Even upon us at that time too, which will be a test for so, we’ve been wary of some of the doom and gloom the strength of demand. And in addition, mortgage out there, because there are factors that could see a payment deferrals could potentially have more or brighter property market outlook than some expect less ended by then as well . September’s General – e.g. look at the large inflows of kiwis returning Election is another potential driver of property home to live, potentially with equity to put to work market uncertainty. in the housing market (but even if they go renting, that’s still extra housing demand). Similarly, housing In terms of the recent buyer mix, first home buyers affordability looks more favourable than it did when have remained a solid presence in the market, but we entered the GFC, thanks to higher household the more significant shifts in market share have incomes and very low mortgage rates this come from investors, both mortgaged and cash. time around . To be fair, some of that rise in percentage market share (especially for cash investors) has been That said, there’s no denying that the economic because of sharper falls in the number of purchases outlook remains weak. GDP is set to fall by 6-7% by other groups, who have had to meet higher this year and unemployment is expected to peak at standards to secure a mortgage (which isn’t an issue close to 10% - a level not seen since the early 1990s. for cash buyers). However, there is also likely to have Meanwhile, the extra government debt that’s been been some genuine ‘bargain hunting’ by investors, incurred in recent months could prove to be a long which has helped their market share to hold up. term restraint on the economy, as we potentially One factor that will have reassured some investors face higher taxes to keep the debt servicing in check. in traditional long-term rental properties is that the feared flood of short-term Airbnb-type holiday lets But as noted, it’s not all doom and gloom. For onto the market (as tourism flows collapsed) hasn’t example, the NZ Activity Index recently developed happened to any great degree so far . by the Reserve Bank, Treasury, and Statistics NZ showed that economic activity in June weighted Overall, property sales volumes could only be across a range of measures was only 1% below a about 70,000 this year, roughly 20% below 2019’s year ago (despite no international tourism). That level. However, in terms of prices, we suspect that return to ‘normality’ has also been seen in the any falls will be smaller than in the Global Financial housing market, with agent appraisals, banks’ Crisis (GFC), when the national average fell by 10%. valuations ordering activity, new listings (both After all, we entered this episode with mortgage for rent and sale), mortgage lending, and property rates much lower and affordability looking better sales all improving and holding at seasonally than in 2007-08, banks in a stronger position to normal levels recently. continue lending, and generally speaking more households with more equity in their homes (due What’s more, given that we entered lockdown to the previous loan to value ratio speed limits). with a low number of total listings available on the This means that the risks of negative equity are market, the return of buyers as we subsequently reduced. Our projection is that average values might moved down the alert levels has seen the supply/ fall by 5-7% in this downturn, which is obviously not demand balance remain relatively tight, in turn welcome for property owners, but a benefit to supporting property prices. That said, there were would-be buyers. nevertheless emerging signs of weakness in our preliminary quarterly house price index for Q2, and As always, we keep a running monitor on the given the downside risks to the economy, it wouldn’t property market every week via our NZ Property be a surprise to see clearer evidence of house Market Pulse articles, so be sure to check these out price falls later in 2020. on our website http://www.corelogic.co.nz/ news-research/all-news/. Our podcast is also a Indeed, the wage subsidy is now scheduled to end great source of data and commentary: https:// on 1st September and that seems likely to drive a corelogicnzpropertymarket.buzzsprout.com/. ‘second round’ of job losses, which in turn will tend 4 4 Macro Economic and Demographic Indicators

5 New Zealand Asset Classes

RESIDENTIAL REAL ESTATE $1 .22 trillion $284 billion in home loans

COMMERCIAL/INDUSTRIAL REAL ESTATE $227 billion

NZ LISTED STOCKS $165 billion

NZ SUPER & KIWISAVER $109 billion

The value of residential property across the country eroded slightly in Q2, totalling $1.22 trillion, with mortgages secured against 23% of this value. In other words, 77% of the value of the property market is household equity. However, it’s also important to note that household debt is high relative to income, and to some extent the debt has only been sustainable in recent years because of low mortgage rates.

The period from April to June was clearly a unique time for the world and financial markets, and the value of shares and pooled investment funds dropped early on. However, more recently, sharemarkets have rebounded and the value of the NZX is now pretty much back to where it was in late March (pre-lockdown).

6 Sources: CoreLogic NZ, Reserve Bank of NZ, NZX, NZ Super Fund 6 New Zealand and Australia GDP growth

Annual Average GDP Growth (%)

8 New Zealand 7 Australia

-1

-2

-3 1990 1994 1998 2002 2006 2010 2014 2018

Annual Change in New Zealand Activity Index and GDP (%)

10%

NZ Activity Index -5% GDP (annual average)

-10%

-15%

-20% 2004 2008 2012 2016 2020

New Zealand’s GDP dropped by 1.6% in Q1 2020, the largest decline in 29 years. COVID-related travel restrictions made a significant contribution to the drop in economic activity in Q1, although continued drought in some parts of the country was a factor too.

Given lockdown for most of April and restricted activity in May too, Q2’s GDP figures (released mid-September) will also show a fall – meaning that we are currently in a recession. Indeed, the freshly-released New Zealand Activity Index (NZAC) indicated that activity was down by 19% year-on-year in April and by 6% in May (albeit only by 1% in June). Government support such as the wage subsidy will have limited the extent of recession so far, but was never going to prevent it altogether.

Ultimately, GDP is anticipated to fall by 6-7% this year, and the size of the economy will be restricted for some time to come by the absence of international tourists.

Source: Reserve Bank of New Zealand, Statistics NZ 7 NZ Population and Migration

Quarterly Change in National Population Change Composition Population (persons per quarter) (persons per quarter)

40000 35000

Quarterly population change 35000 30000 Natural increase 4 quarter moving average Net migration 30000 25000

25000 20000

20000 15000

10000 15000

5000 10000 0 5000 -5000 0 1991 2000 2009 2018 -10000 1996 2005 2014

Annual Change in Population (persons)

76,000

24,400

5,300 3,900 3,600 1,400 1,200

New Zealand Auckland Christchurch Tauranga Hamilton Wellington Dunedin

National population growth accelerated in the first quarter of 2020, rising from an annual rate of 1.7% in Q4 2019 to 2.0% – the highest since Q4 2016. This meant that our population has now surpassed the 5m mark.

As ever, the natural rate of increase (births minus deaths) remains pretty steady, leaving migration as the most important driver of upswings and downswings in overall population change (and hence property demand). Indeed, net migration has increased in recent months as many non-citizens who might otherwise have left NZ have had to stay instead. At the same time, more kiwis have been staying home instead of making a move overseas, and there’s also been an influx of kiwis returning back from overseas.

Early in lockdown, it was assumed by some commentators that net migration would drop off sharply in the coming months and remove a key support for the property market. However, with as many as 1m kiwis living overseas, these ‘returners’ to NZ could prop up our overall net migration balance for some time to come, and in turn bolster property demand, whether that be for owner-occupation or renting.

8 Sources: Statistics New Zealand Long term migration (12-month rolling totals)

200,000 Net Arrivals Departures 150,000

100,000

50,000

-50,000 2002 2006 2010 2014 2018

Comparison of old and new net migration series (12-month rolling totals)

100,000

Old method 80,000 New method

60,000

40,000

20,000

-20,000

-40,000 2002 2006 2010 2014 2018

Source: Statistics New Zealand 9 Regional Building Consents

New dwelling consents trend The construction sector has taken a significant hit from (consents per month) COVID-19, with many projects being put on hold over lockdown and some of the larger firms already laying 1,600 Auckland Region off staff. Indeed, the number of new residential dwelling 1,400 Waikato Region Wellington Region consents issued in March was down by 8% compared 1,200 Canterbury Region to a year earlier, followed by a 17% drop in April. May’s Rest of NI Rest of SI 1,000 figure was an improvement, but the annual decline still came in at 5%. We’ve clearly now passed the peak for 800 consents in this cycle (annual total of 37,882 in the 600 February 2020 year), but given the very high starting 400 point, it’ll be a long time before the falls return the

200 number of consents to ‘normal’.

0 Indeed, the large upswing in dwelling consents seen 1995 1999 2003 2007 2011 2015 2019 prior to COVID-19 means that builders still have a solid Sources: Statistics New Zealand pipeline of work for a number of months yet, potentially

carrying them through into 2021. However, as the recession bites and unemployment rises, fewer households will have the confidence or ability to build a new home, so next year could be much more sluggish for builders. Any tightening by the banks in terms of finance for construction would be an added pressure.

Longer term, however, our population is likely to continue to grow steadily and the existing shortages of affordable property in some parts of the country will still need to be remedied too. A key trend prior to lockdown was the construction of smaller dwellings, such as townhouses and apartments, and this is likely to remain a feature post-lockdown too, as a more intensified housing stock becomes more important.

Meanwhile, alterations & additions activity has also been high in recent years (also helping to improve the quality of our housing stock), but will now probably ease down too, as household finances come under more pressure . Consumer Confidence

ANZ-Roy Morgan Consumer The latest ANZ Roy Morgan measure showed that, after Confidence (index, monthly) sharp falls in March and April, consumer confidence

160 started to rebound in both May and June. The latest reading of 104 in June (seasonally adjusted) was back 140 up to March’s levels, but still below the norm of around 120 120 in late 2019 and early 2020, as well as the long term 100 average (119). In other words, confidence amongst

80 households has rebounded from the worst point of alert level four lockdown, but there’s still significant caution 60 out there – understandable when jobs are being lost and 40 the wage subsidy will end on 1st September. In turn, this 20 caution will also keep a restraint on the housing market.

0 2004 2007 2010 2013 2016 2019 Meanwhile, a similar story has applied to business confidence – a sharp drop in and around full lockdown, and then a gradual recovery over May and June, but not back to the levels that prevailed pre-lockdown. A key indicator to watch for business confidence is firms’ employment intentions, and unfortunately these 10 Sources: ANZ, Roy Morgan continue to point to further job cuts ahead. Employment

Annual change in employment, Labour force participation rate (%) full time and part time

72 10%

8% 70

6% 68 4% 66 2%

0% 64

-2% 62 -4% Full time 60 -6% Part time

-8% 58 1987 1998 2009 2020 1986 1990 1994 1998 2002 2006 2010 2014 2018

Unemployment Rate (%) Number of Jobseeker Support claimants 12

240,000 10 220,000

8 200,000

6 180,000

160,000 4 140,000

2 120,000

0 100,000 1986 1990 1994 1998 2002 2006 2010 2014 2018 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20

In the first three months of the year, employment continued to grow, with full-time up by 0.3% in the quarter (1.8% annually) and part-time rising by 1.2% (albeit still down by 0.9% annually). Overall employment on the trend series stood at 2.66m in Q1, about 1.3% higher than a year earlier (or 33,000 employees). Meanwhile, the labour force participation rate remained above 70% (i.e. seven in every ten working age people were either employed or looking for work) and the unemployment rate continued to hover at a low 4% or thereabouts. In other words, prior to lockdown, the labour market was still strong .

Of course, since the end of March, everything has changed and timelier indicators show that the labour market is now weakening. Stats NZ’s monthly series on filled jobs showed a drop of 1.6% in April, which was only partially reversed by May’s 0.8% increase. Meanwhile, the Ministry of Social Development’s figures on Jobseeker Support claimants show a rise of more than 50,000 since the end of March, and implies an increase in the unemployment rate already from about 4% to as high as 6%. The ending of the wage subsidy on 1st September will unfortunately see more jobs lost, and most expectations are that the unemployment rate will peak towards 10% later in 2020. This clearly highlights downside risks to property sales volumes and prices.

Source: Statistics NZ, Ministry of Social Development 11 Interest Rates

Mortgage Interest Rates (%) The Reserve Bank (RBNZ) had already cut the official cash rate (OCR) to 0.25% 25 Floating mortgage interest rates prior to alert level four lockdown, but since then has commenced its large-scale asset

20 purchase programme (quantitative easing), delayed the extra bank capital requirements for at least a year, and 15 removed the loan to value ratio (LVR) speed limits for at least a year too . It 10 has also asked the banks to assess their readiness for a negative OCR, with a view to potentially implementing that early in 2021 5 (although retail lending and deposit rates would stay positive). 0 1965 1971 1977 1983 1989 1995 2001 2007 2013 2019 In other words, the RBNZ has taken significant action to try and avert the Official Cash Rate and Mortgage Rates (%) worst effects of the COVID-19 pandemic

12 and economic recession, and to date this has been successful in keeping market

10 interest rates low – indeed, mortgage rates have generally fallen to less than 3% across OCR history all fixed terms. Clearly, this has benefitted 8 OCR projection mortgage borrowers, alongside the help they’ve been able to access via shifts to 6 interest-only loans, extensions to mortgage lengths, and payment deferrals. At least 4 $40bn of existing mortgage debt has had some form of relief in recent months, 2 equivalent to about 15% of the stock of loans . 0 2000 2009 2018 Overall, mortgage interest rates are set to stay ultra-low for some time to come, Average Two Year Fixed Rates (%) and may not actually have reached a floor just yet. 5 .2%

5 .0%

4 .8%

4 .6%

4 .4%

4 .2%

4 .0%

3 .8%

3 .6%

3 .4% 2018 2019 2020

12 Sources: Reserve Bank of New Zealand and interest.co.nz Housing Overview

13 Early Property Market Indicators

Property Guru survey – most common reason for listing (% of respondents)

% 24 Downsizing

% 19 Financial distress

% 16 Fearing price falls

% 16 Upsize/lifestyle

% 14 Other (e g. . job relocation)

% 10 Selling a vacant rental

During alert level four lockdown, measures relating to the early stages of a sale process – i.e. pre-listing (such as appraisals generated by real estate agents) and pre-mortgage (valuations ordered by banks) – fell away sharply, which was no surprise. However, as our Early Market Indicators Report shows, they then bounced back steadily, and have recently been running at around normal levels: https://www.corelogic.co.nz/ early-market-indicators

However, a survey we recently launched of Property Guru users was less reassuring, as it showed some vendors bringing property to the market for the ‘wrong’ reasons, such as financial distress (either now or potentially in the short term) or fears about future price falls. The reasons why a listing has been made will be a key factor to keep an eye on as we move through the rest of the year.

14 Listings

Total listings (Three-week rolling total)

Rest of NZ 1,800 Auckland

1,500

1,200

900

600

300

0 Year Ago Jul 15 Jul 16 Jul 17 Jul 18 Jul 19 Jul 20

New property listings for sale clearly fell sharply during lockdown, but like a range of other indicators they’ve now rebounded and are similar to the same time last year, or even above in some parts of the country. The normal seasonal lull is upon us, however, so new listings flows will now ease downwards (as they usually do) over the next 6-8 weeks, before rising again in Spring. That increase will be a test for the strength of demand, and whether or not there are enough buyers circling from September onwards to absorb some of that stock.

New Listings Average last 3 weeks 1 month change 1 year change

New Zealand 1,841 13% 11%

Auckland 523 25% 7%

Waikato 205 9% 7%

Bay of Plenty 143 4% 6%

Wellington 126 -5% -6%

Canterbury 293 17% 17%

Otago 121 2% 38%

15 Listings

Total Listings Although new for-sale listings have rebounded, so have actual sales of property, which means that the total 35,000 Auckland (RHS) stock of listings available on the market Rest of NZ 10,000 remains pretty low in most parts of the 30,000 country. Auckland has dropped steadily 8,000 over the past year, while Bay of Plenty 25,000 and Wellington have also experienced 20,000 6,000 annual declines in the stock of total listings. Waikato and Canterbury have 15,000 been flat (at low levels), while it’s only 4,000 Otago that’s really seen any meaningful 10,000 rise in total listings lately. But even 2,000 5,000 there, although the rise has been strong (33%), that again was from a low base. 0 YeY eaarr AAggo 0 Overall, the market is now likely to Jul 15 Jul 16 Jul 17 Jul 18 Jul 19 Jul 20 remain tight in terms of stock on the market until at least Spring .

New Listings Latest week 1 month change 1 year change

New Zealand 26,279 -1% -5%

Auckland 7,922 1% -17%

Waikato 3,123 0% 0%

Bay of Plenty 1,894 -3% -7%

Wellington 1,118 -13% -9%

Canterbury 4,271 0% 0%

Otago 1,495 0% 33%

Weekly flow of new for-rent listings Meanwhile, the early fears in lockdown 4,000 2020 that Airbnb-type properties would be 3,500 2019 switched out of the holiday let sector 2018 and into the traditional long-term 3,000 rental market (hence raising supply 2,500 and suppressing rents) don’t seem to have been borne out so far. Indeed, 2,000 anecdotal evidence suggests that many Airbnb hosts are happy with the level 1,500 of domestic bookings that they’ve had. 1,000 Moreover, our for-rent listings data show that the weekly figures are 500 actually running below the 2018 and 0 2019 levels – suggesting no major 16 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 switching of Airbnb properties. Lending conditions

Annual Change in Gross New High LVR Lending to Owners and Lending Flows ($m per month) Investors (% of new lending)

1,500 25% Owner occupier lending > 80% LVR 1,000 Investor lending > 70% LVR

500 20% Previous owner occupier speed limit(20%) 0

-500 15% -1,000

-1,500 Investor 10% Owner-occupier -2,000

-2,500 5% Previous investor speed limit(5%) -3,000 2016 2017 2018 2019 2020 0% Refinancing Profile for Mortgages 2017 2018 2019 2020 (% of stock) The last few months have clearly been a volatile

40% period for mortgage lenders, with most having no choice early in lockdown but to handle queries only 35% Owner-occupier from their existing customers; new customers were Investor 30% largely put on hold. Not surprisingly, then, the value of

25% new lending in April was only $2.7bn, down from nearly $5.5bn in the same month a year earlier. May’s result 20% was stronger, but still well below the levels of a year ago 15% – $4.3bn versus $6.5bn the same month a year earlier. Both investor and owner-occupier lending activity has 10% fallen sharply over the past few months, as borrowers 5% remain cautious and banks take a similar approach.

0% Floating Fixed < 1 year Fixed > 1 year But although new lending activity has been subdued, there have still been plenty of interesting points to note. First, the government and banks were quick to introduce the mortgage payment deferral scheme, while banks have also shown plenty of willingness to extend the terms of loans for people facing financial stress and/or allow them to switch to interest only. Indeed, prior to lockdown, about 25% of lending flows were interest only, but that has quickly risen to 30% post- lockdown. Overall, it’s been estimated that about $40bn of loans have sought some kind of payment relief in recent months, equating to about 15% of the stock of mortgages.

Meanwhile, the Reserve Bank has also pushed out the extra capital requirements for banks (which were originally supposed to have started on 1st July this year) for at least a year, which has effectively given banks more money to potentially lend out over the coming months than otherwise. The Reserve Bank also put a temporary hold on the loan to value ratio speed limits from 1st May, giving more people scope to buy a property with less than a 20% deposit. However, the effect of this has been dampened by the banks (understandably) maintaining their own internal LVR policies pretty close to what was previously mandated.

The Reserve Bank of course has also embarked on its large scale asset purchase programme, or quantitative easing. This has helped to keep money circulating around the economy and kept downwards pressure on mortgage rates.

Overall, there are clearly challenges ahead for mortgage lending, with question marks around banks’ willingness to lend and also borrowers’ desire to take on debt. The end of the wage subsidy on 1st September is a key date for the economy and further rises in unemployment thereafter would tend to dampen the mortgage market, given banks’ focus on borrowers’ job security and ability to keep servicing the debt. 17 Sources: Reserve Bank of New Zealand Sales Volumes

Nationwide Sales Volumes Nationwide Annual Change (monthly total) in Sales Volumes (%)

12,000 11,000 40% 10,000 9,000 20% 8,000 7,000 0% 6,000 -20% 5,000 4,000 -40% 3,000 2,000 -60% 1,000 -80% 2011 2014 2017 2020 1996 1999 2002 2005 2008 2011 2014 2017 2020

Regional Sales Volumes (year-on-year % change)

0% -37 .3% -32 .4% -47 .8% -45 .8% -37 .3% -30 .6% -36 .7% -5% -10% -15% -20% -25% -30% -35% -40% -45% -50%

Needless to say, the past few months have been a severely distorted period for property sales activity, with no settlements involving the physical movement of people allowed for most of April. Even as we moved into alert level three, it still wasn’t ‘normal’ to get a property sale done.

In terms of the actual numbers, sales dropped by about 80% annually in April and by around 40% in May. June’s result was much better – a rise of 11% – but this is likely to have been driven partly by a shift of sales into June that otherwise would have happened in April or May. That said, genuine new demand does seem to have emerged after lockdown, and the rebound has if anything been better than might have been expected.

At a more detailed level, the decline in sales activity over the June quarter as a whole was at least 30% (from the previous year) in each of the main centres, with Hamilton and Tauranga the softest in terms of market activity levels. Of course, with the supply of listings low around most parts of the country, the drop in achieved sales is not entirely due to sluggish demand – sometimes it’s due to a lack of choice for buyers.

Again, Spring is looming as a key period for property sales activity, with mortgage payment deferrals winding down, the wage subsidy ending, and the General Election also potentially weighing on confidence.

18 Source: CoreLogic Nationwide Values

Average Value of Housing Stock - New Zealand ($) $738,018

Annual and Quarterly Change in Value (%)

$9,742 1 .3% $50,997 7 .4% $220,139 43%

In the year to June, national average property values rose by 7.4% on our monthly index. But a more informative comparison in the current environment is either the three month change and/or one month change, with values up by 1.3% since March, but down by 0.2% from May to June. This is early evidence of a COVID effect on property prices.

In addition, an alternative index we look at is our quarterly measure, which is based on sales agreements across the whole of each respective quarter. It showed that the national average dropped by 1.5% in Q2 (on a preliminary basis), with falls of more than 2% in Auckland and Dunedin.

Overall, although it’s not all one-way traffic yet (e.g. Tauranga saw values rise in Q2 on our quarterly index), the signs seem to be emerging of a turning point for property prices. Our working assumption is that they could ultimately fall by 5-7% nationally, which would be unwelcome for property owners, but still a smaller decline than the figure of 10% seen during the GFC . 19 House Price Index

Average Dwelling Value ($) The past three months have obviously been a very distorted period for the property market, and clear price trends haven’t yet emerged – given that property sales volumes only really seem to have normalised towards the end of June, we need to treat price data for April and May with caution.

That said, the general message is that property values have probably held up a bit better than seemed likely during those uncertain times of alert level four lockdown. Our monthly index shows that average property values nationally rose by a total of 1.3% between March and June, albeit they dipped by a minor 0.2% in June alone.

The first signs of a turning point for values may have started to become clearer in Dunedin (0.9% fall in June), Wellington (-0.5%), and Auckland (-0.3%), although Tauranga and Christchurch recorded further small gains in June.

Meanwhile, if you look at a broader measure across the whole quarter (which is our quarterly index), the signs of a turning point look a little stronger. The national average fell by more than 1% over the quarter as a whole, and Auckland and Dunedin saw drops of more than 2%. But to emphasise that it’s not all one-way traffic yet, Tauranga saw a rise in Q2 of more than 1%.

Overall, then, it’s too early to be sure that property values have started a downturn – some areas are still rising, and different measures yield slightly different results. However, with the economy in recession and unemployment rising, the risks to property values for the rest of 2020 are more to the downside than upside. Queenstown stands out as a clear vulnerable area, while Invercargill, for example, now has extra challenges to face from the pending closure of the Tiwai smelter.

JUNE 2020 Current Value 1 month 3 months 12 months 5 years New Zealand $738,018 -0 .2% 1 .3% 7 .4% 43%

Auckland $1,082,541 -0 .3% 1 .5% 5 .4% 29%

Hamilton $627,777 -0 .2% 0 .7% 7 .3% 64%

Tauranga $794,189 0 .2% 2 .8% 6 .7% 64%

Wellington $783,655 -0 .5% 0 .4% 10 .4% 70%

Christchurch $518,369 0 .2% 0 .8% 3 .7% 9%

Dunedin $547,531 -0 .9% 1 .8% 18 9%. 85%

Source: CoreLogic NZ QV Monthly House Price Index

20 House Price Index

Annual Value Change (%)

-9% 21%

The pockets of strength in property values (over a 12-month horizon) around the country are easy to see in Southland and Otago, and almost all of the lower and central North Island. The top half of the South Island and Auckland/Waikato/Bay of Plenty have been more subdued, but still showing gains in values.

*Size of bubble represents the number of properties in the Territorial Authority 21 Three Month Value Change (%)

-2% 5%

Switching to a timelier and more relevant three-month change, the effects of COVID-19 and the recession since the end of March are easier to see in average property values – Queenstown, the West Coast, and top of the South Island have gone flat, or are showing falls. Emerging weakness is also becoming clearer around the East Coast of the North Island .

22 *Size of bubble represents the number of properties in the Territorial Authority Rent

National Annual Change in Value and Rent (%) Gross Rental Yield – National (%)

20% 5 .0% Annual change in value Annual change in rent 4 .5% 15% 4 .0%

10% 3 .5%

3 .0% 5% 2 .5% 0% 2 .0%

-5% 1 .5% 1 .0% -10% 0 .5%

-15% 0 .0% 2005 2008 2011 2014 2017 2020 2004 2007 2010 2013 2016 2019

National rents averaged $445 per week in the three Dunedin has already been covered (strong rental growth), months to June, up by 4.8% from the same quarter a year but the rest of the main centres are ticking along relatively earlier. To date, there isn’t much evidence at the national well for now too – with rental growth in the vicinity of level that rents have been too badly affected by COVID-19 5% in Auckland, Hamilton, Tauranga, Wellington, and lockdown, recession etc. Indeed, as noted earlier in the and Christchurch. report, rental listings have if anything been a little lower than normal, underpinning the level of rents. However, if After a slow upwards trend for a number of months, gross the GFC is anything to go by, rental growth is likely to slow rental yields have edged back down slightly in the past few markedly over the rest of the year. months, with the national average now at 3.2%. The figures in Christchurch (3.6%) and Dunedin (3.7%) are higher than That steady national average masks some quite large the average, but Auckland is significantly lower (2.6%). regional divergences, however. For example, rents in Gisborne, Hastings, Palmerston North, Lower Hutt, and It remains unclear how yields will move from here, as the Dunedin have all grown by more than 10% in the past year. balance of risks to both rents and property values is to the But Waimakariri for example has seen rents fall by almost downside. Indeed, it’s possible that yields stay relatively 3% in the past year, and the effects of the closed borders unchanged over the coming months. Of course, for any can be seen in Queenstown – rents there have dropped by investor who is seeing the value of their property drop, about 10% over the past year, from $593 per week to $533. a stable yield might only be small consolation. Practically all of that decline has come since March.

Average Annual Gross Yield Weekly Rent Change in Rent Auckland $545 3 .5% 2 .6%

Hamilton $413 5 .7% 3 .4%

Tauranga $491 4 .0% 3 .2%

Wellington $543 5 .6% 3 .2%

Christchurch $363 2 .6% 3 .6%

Dunedin $388 10 9%. 3 .7%

Sources: CoreLogic NZ and MBIE

23 Buyer Classification

Buyer Classification – NZ Property Transfers by Non-Citizens New Zealand (% of sales) or no Resident Visa (% of total transfers)

3 .5% Buying 30% 30% Selling 3 .0% 26% 26% 25% 23% 2 .5% 21% 20% 2 .0%

14% 1 .5%

10% 10% 1 .0%

5% 6% 4% 5% 0 .5% 4% 0% 2% 0 .0% 2005 2008 2011 2014 2017 2020 2017 2018 2019 2020 Mover Multiple Property Multiple Property Source: Statistics New Zealand Owner Mortgage Owner Cash First Home Buyer New to Market Other ReEntry

Broadly speaking, the trends that we’ve seen for a few quarters now remained in place in post-COVID Q2, but there were also hints of changes in buyer behaviour.

Starting with first home buyers (FHBs), after a long upwards trend to a market share of 24% late last year, they only accounted for 23% of purchases in the second quarter – not a large change, but still one to watch. After all, although KiwiSaver balances (and hence FHBs deposits) have rebounded since the initial lockdown slump, it wouldn’t be a surprise if some would-be buyers waited on the sidelines to see if prices fall, with the hope of getting a bargain later. Anybody with uncertainty around their job situation is likely to bide their time too.

Looking at movers, the downward trend in their share of property purchases also continued in the second quarter. At 26%, that figure is down from 29% a year ago, and also the lowest level since mid-2009. As has been the case for some time now, we suspect that many movers are finding it difficult to raise the funds required to trade up, either because of high prices or already-high mortgage debts. This is likely to have played a role in the rise in dwelling consents for alterations & additions, as existing homeowners renovate rather than relocate. However, movers’ share of purchases could still be supported over the coming months by people who ran out of space during lockdown looking to get a larger house (provided that it can be financed).

Turning to investors, cash buyers have continued to steadily raise their market share, helped out by their ability to circumvent the still-cautious lending policies at the banks (which have hindered other buyer groups). These buyers may also be sensing opportunities to snap up some ‘bargains’ in a subdued market .

Mortgaged investors have also retained a solid presence in the market since the end of March, sitting at 25% for Q2 – anecdotal evidence strongly suggests that ‘mum and dad’ investors are much keener to put their equity/deposit to work in the property market rather than the low returns on offer from term deposits.

More generally, it’s important to reiterate that the number of sales is relatively low at present, so this is a caveat that needs to be kept in mind when looking at the market share figures. However, it’s not too hard to envisage recent trends continuing – e.g. movers staying quiet as the wait out the uncertainty, FHBs potentially also sitting on the sidelines a little, but investors looking more seriously at trying to strike a hard deal.

24 NZ Property Transfers by Non-Citizens or no Resident Visa (% of total transfers) Main Cities Housing Market Indicators

25 Auckland Market Activity

Buyer Classification – Auckland Generally speaking, the composition of (% of purchases) Auckland’s property purchasers since the end of March has been similar to the prior few quarters, albeit with some early signs of change. 30% 28% 26% 27% First, movers (or existing owner occupiers 27% 26% who are relocating, e.g. downsizing, 23% 20% upsizing) remain relatively quiet, with just 23% of all purchases in Q2. That market 13% share for movers is basically as low as it’s been since 2009 – potentially reflecting 10% the high costs to move house at present 7% 6% (especially in Auckland, where the value gap 4% 4% between three bedroom and four bedroom 0% 1% properties is high) and/or already stretched 2004 2008 2012 2016 2020 borrowing ability. Another factor is likely to Mover Multiple Property Multiple Property be the COVID-related uncertainty, so if a Owner Mortgage Owner Cash mover doesn’t need to relocate, they’re First Home Buyer New to Market Other ReEntry preferring instead to stay where they are and ride out any uncertainty. Buyer Classification – Northland region (% of purchases) Meanwhile, first home buyers and mortgaged multiple property owners 40% (MPOs, or investors) continue to jostle for market share, both sitting at 26% in Q2 – 34% their figures have been close to each other 30% for about the past 18 months now . Despite 29% the high cost of housing in Auckland, FHBs 22% 22% 20% are holding on well (in some cases targeting 17% 15% 15% apartments due to the lower entry cost), 15% and although gross rental yields are lower 10% 7% than in the past, investors clearly still see 6% 4% 7% some value in the Auckland market. 3% 0% 4% 2004 2008 2012 2016 2020 Finally, there are hints that cash investors Mover Multiple Property Multiple Property (MPOs) may be starting to hunt out some Owner Mortgage Owner Cash bargains – their share of purchases rose to First Home Buyer New to Market Other ReEntry 13% in Q2, up from 11% in late 2019.

Admittedly, part of that rise in % market share can be explained by a lower number of purchases by other groups, but even so, anecdotal evidence still points to some cash investors genuinely targeting Auckland property again now .

Around Auckland’s neighbouring areas, the mix of buyers across the Northland region is strongly weighted towards movers. However, over the past five years their share of sales has reduced, with mortgaged investors increasing their share. First home buyers had also been taking a larger share over the last few years but that has come back in the last two quarters.

26 Auckland Values

Average value of housing stock – Annual and quarterly value change – Auckland ($) Auckland (%)

$1,082,541 $1,100,000 25% $16,506 1 .5% $55,428 5 .4% $1,000,000 20% $240,935 29% $900,000 $800,000 15%

$700,000 10% $600,000 $500,000 5%

$400,000 0% $300,000 $200,000 -5%

$100,000 -10%

2005 2008 2011 2014 2017 2020 2005 2008 2011 2014 2017 2020

On the usual measure we report on (rolling three month sales index), Auckland’s property values have generally held up better since March than looked likely in the early days of alert level four lockdown. The overall Auckland change from March to June was 1.5%, albeit there was a 0.3% drop in June alone. Waitakere, Manukau, and Papakura recorded stronger gains in Q2, with Franklin, North Shore, and Rodney lagging a little.

However, when we look at the broader measure of all sales in the June quarter, the patterns have been more subdued. On this measure, Franklin saw values rise by 0.7% in Q2, and Rodney and Waitakere only saw minor drops of 0.5%. But the North Shore and Auckland City saw larger falls, which repeats the experience of early 2019, when the more expensive areas saw larger declines.

Overall, it’s early days yet, and different measures reveal slightly different patterns – e.g. the evidence from the second half of June alone was more encouraging than for Q2 as a whole. But the risks to Auckland (and national) property values in the coming months are still more likely to the downside than upside.

JUNE 2020 Current Value 1 month 3 months 12 months 5 years Rodney $982,802 -0 .1% 0 .8% 4 .1% 34%

North Shore $1,247,243 -0 .8% 1 .2% 5 .9% 26%

Waitakere $857,496 -0 .1% 2 .0% 5 .3% 28%

Auckland City $1,277,755 -0 .6% 1 .6% 5 .8% 27%

Manukau $939,908 0 .2% 1 9%. 5 .7% 34%

Papakura $728,414 0 .6% 1 .8% 2 .7% 43%

Franklin $696,001 1 .1% 1 .3% 3 .5% 34%

27 Current Auckland Suburb Values

Auckland suburb value change 2020 ($)

Although property value trends since lockdown have weakened, the prior 6-9 months had seen an upturn, and so annual comparisons are still relatively strong. CoreLogic’s interactive ‘Mapping the Market’ product shows these changes, it’s freely available and updated quarterly. The heatmaps in ‘Mapping the Market’ are point-in-time snapshots of median values from 2019 and 2020, and show the % and $ change over that period too . See www.corelogic.co.nz/mapping-market

Auckland is illustrated in the heatmap here. As at June 2020, Herne Bay remained the highest priced suburb in Auckland, with a median property value of $2.61m. Orere Point had the lowest median value, of around $535,000. Only eight suburbs had a median value <$600,000; 111 at least $1m. Thirteen suburbs had seen median values fall over the previous year, although only six had seen falls of 1% or more. The largest were -5.7% for Mellons Bay and -5.0% for Eastern Beach. In dollar terms, the largest fall was Mellons Bay, at $97,050. By contrast, Westmere and Ponsonby had seen double-digit percentage increases over the previous year, and twelve suburbs had seen gains of >$100,000.

28 *Based on CoreLogic Median E-valuer 29 Hamilton Market Activity

Buyer Classification – In Hamilton, although the number of Hamilton (% of purchases) property transactions has dropped away in Q2 (as it has done everywhere across 40% the country), the figures relating to % market share of purchases have stayed 31% pretty steady . 30% 31% 27% 26% Cash multiple property owners (investors) 25% 23% have held steady at around a 10% market 20% share, while movers have also been relatively unchanged at 23%. These two buyer groups in Hamilton have tended to 10% 10% have relatively consistent market shares 7% over the longer run too. 4% 4% 0% 3% 2% Meanwhile, mortgaged investors’ market 2004 2006 2008 2010 2012 2014 2016 2018 2020 share of purchases was 31% in Q2, up a Mover Multiple Property Multiple Property Owner Mortgage Owner Cash little from Q1, but still in line with recent norms. And then finally, first home buyers First Home Buyer New to Market Other ReEntry had a 26% market share in Q2, down a little Buyer Classification – Waikato Region from Q1, but again pretty much in line with (% of purchases) the recent past. Around the wider Waikato region (excluding Hamilton), buyer classification patterns were also pretty consistent from Q1 to Q2, even though we had lockdown early in Q2. 31% 30% The biggest difference between Hamilton 25% itself and the wider region is that movers 21% have a higher share of activity outside the 19% 17% 18% city, with FHBs and investors taking a lower profile in areas such as Waikato District 14% and Waipa . 6% 6% 4% 5% 3% 2%

Mover Multiple Property Multiple Property Owner Mortgage Owner Cash First Home Buyer New to Market Other ReEntry

30 Hamilton Values

Average value of housing stock – Annual and quarterly value change – Hamilton ($) Hamilton (%) $627,777 $4,490 0 .7% $600,000 30% $42,513 7 .3% $245,984 64% $500,000 25% 20% $400,000 15%

$300,000 10% 5% $200,000 0% $100,000 -5% $0 -10% 2005 2008 2011 2014 2017 2020 2005 2008 2011 2014 2017 2020

Hamilton’s average property values rose by 0.7% from March to June, albeit there was a minor dip of 0.2% in June alone. The average value of a property in the city now stands at $627,777.

Hamilton North East weakened the most in Q2 (0.8% drop), while Central & North West showed a 0.7% rise. Meanwhile, there was a degree of residual strength in Hamilton South East and South West .

Outside Hamilton, the Waikato District continued to see gains, with average values up by almost 4% in Q2. However, Waipa for example saw values decline in June itself and over the three month period from March (-1.1%).

JUNE 2020 Current Value 1 month 3 months 12 months 5 years Hamilton Central $587,512 -0 .4% 0 .7% 8 .9% 64% & North West

Hamilton North East $767,383 -0 .9% -0 .8% 4 .8% 58%

Hamilton South East $587,117 0 .4% 1 .6% 8 .9% 69%

Hamilton South West $561,994 0 .8% 2 .1% 7 9%. 67%

31 Tauranga Market Activity

Buyer Classification – During the period from April to June, Tauranga (% of purchases) movers remained the key buyer group in Tauranga, accounting for 30% of purchases (albeit in a quieter overall market in terms 40% of number of transactions). This illustrates how a solid base of equity/wealth (which 33% movers have, either from having lived 30% 30% locally or bringing in equity from other parts of the country) is important in 23% 22% Tauranga, rather than necessarily local 20% 19% 16% 17% wages being a key driver for a property 15% purchase. 10% 6% 6% Meanwhile, another interesting trend is the 4% 4% rising market share for cash investors, 3% 2% 0% accounting for 19% of purchases in Q2, up 2004 2006 2008 2010 2012 2014 2016 2018 2020 from 14% a year ago. Of course, given that Mover Multiple Property Multiple Property they don’t need to try and secure a Owner Mortgage Owner Cash mortgage (in a still-controlled lending First Home Buyer New to Market Other ReEntry environment), it is logical that their market Buyer Classification – Bay of Plenty share will tend to rise in these conditions. Region (% of purchases) Generally speaking, Tauranga’s patterns are replicated across the wider Bay of Plenty 50% region (excl. Tauranga), with movers a key buyer group, and cash investors having 40% recently seen a rising market share.

30% 30% 29% 27% 22% 21% 20% 18% 15% 13% 10% 6% 5% 4% 5% 0% 3% 3% 2004 2006 2008 2010 2012 2014 2016 2018 2020

Mover Multiple Property Multiple Property Owner Mortgage Owner Cash First Home Buyer New to Market Other ReEntry

32 Tauranga Values

Average value of housing stock – Annual and quarterly value change – Tauranga ($) Tauranga (%) $794,189 $800,000 30% $21,746 2 .8% $50,211 6 .7% $700,000 25% $308,628 64%

$600,000 20%

$500,000 15% 10% $400,000 5% $300,000 0% $200,000 -5% $100,000 -10% $0 2005 2008 2011 2014 2017 2020 2005 2008 2011 2014 2017 2020

The emerging signs of weakness for property values across NZ are yet to be seen to any great degree in Tauranga. Indeed, our monthly index showed that values rose by 0.2% in June and by 2.8% from March to June. Meanwhile, looking at prices based across the quarter as a whole, the data for Tauranga was also positive – a rise of more than 1% for Q2. Around the wider Bay of Plenty, values also continued to increase in Q2, including Rotorua and Whakatane.

33 Wellington Market Activity

Buyer Classification – Similar to the rest of the country, the Wellington (% of purchases) number of property transactions has fallen around the wider Wellington area 33% (City, Porirua, Lower Hutt, Upper Hutt), but in that quieter market, the share of 30% 27% 28% purchases made by first home buyers has 27% held high – in fact, at 33% in Q2, that’s on a par with the previous peak in Q1 2018. In 20% 21% other words, FHBs are still a strong presence in these markets.

Meanwhile, the share of purchases made 10% by mortgaged multiple property owners 8% 7% 5% (investors) also remains high by past 4% 4% 3% standards, at 28%. About two years ago, 0% 2% it was less than 25%. By contrast, movers’ 2006 2008 2010 2012 2014 2016 2018 2020 market share has continued to edge down, Mover Multiple Property Multiple Property now sitting at just 21% - a year ago it Owner Mortgage Owner Cash was 24%. First Home Buyer New to Market Other ReEntry At a more detailed level, mortgaged Buyer Classification – Lower Hutt investors actually have a higher market (% of purchases) share (33%) in Wellington City itself than FHBs (30%), while in Upper Hutt movers and FHBs are neck and neck for first place (33% each). In Porirua and especially Lower 40% 38% Hutt, FHBs are the top buyer group – 30% in Lower Hutt, their market share in Q2 30% 30% was 38%, well above the next group 25% 23% (mortgaged investors) at 23%. 20% 20%

10% 7% 5% 5% 4% 4% 0% 3% 2% 2006 2008 2012 2016 2020 Mover Multiple Property Multiple Property Owner Mortgage Owner Cash First Home Buyer New to Market Other ReEntry

34 Wellington Values

Average value of housing stock – Annual and quarterly value change – Wellington ($) Wellington (%) $783,655 $800,000 $3,253 0 .4% $73,852 10 .4% $700,000 20% $323,904 70%

$600,000 15%

$500,000 10% $400,000 5% $300,000 0% $200,000

$100,000 -5%

$0 -10% 2005 2008 2011 2014 2017 2020 2005 2008 2011 2014 2017 2020

Property values around the wider Wellington area have begun to show some signs of weakness, falling by 0.5% in June across the City, Porirua, Upper Hutt, and Lower Hutt. However, over the three month measure, only Wellington City saw values drop (by 0.4%). Across the region, Carterton also weakened a bit in Q2 (-1.3%).

That general pattern was replicated on the measures looking at the quarter as a whole, which showed a fall for values across the City, Porirua, Upper Hutt and Lower Hutt of 0.4% in Q2.

JUNE 2020 Current Value 1 month 3 months 12 months 5 years Porirua $691,176 -0 .2% 1 .1% 15 .5% 80%

Upper Hutt $639,489 1 .0% 2 .0% 13 .6% 90%

Lower Hutt $686,283 -0 .3% 1 .6% 15 .0% 82%

Wellington City $887,633 -0 .8% -0 .4% 7 .3% 62%

Carterton $477,087 0 .3% -1 .3% 10 .1% 81%

Masterton $440,126 3 .3% 2 .7% 14 .3% 81%

South Wairarapa $578,835 -0 .9% 1 .8% 14 7%. 90%

Kapiti Coast $669,773 0 .1% 1 .8% 11 .4% 75%

35 Christchurch Market Activity

Buyer Classification – Christchurch has been a first home buyer’s Christchurch (% of purchases) market in recent years (partly due to flat house prices which has helped FHBs to 40% have more time to raise larger deposits), but the spread of activity evened out in 33% Q2 (bearing in mind the drop in overall 30% numbers of sales). FHBs’ share of purchases dropped from 28% in Q1 to 25% in Q2, 24% 25% 23% 24% while movers’ share rose from 23% also 20% to 25%. At the same time, mortgaged investors’ share of activity held pretty 14% steady at 24%. 10% 8% 6% Similar to many other parts of the country, 4% 5% cash investors’ share of purchases rose in 4% 0% 2% Q2 in Christchurch, and is now up from 12% 2004 2006 2008 2010 2012 2014 2016 2018 2020 six months ago to 14%. We get the sense that cash investors are starting to hunt out Mover Multiple Property Multiple Property Owner Mortgage Owner Cash ‘bargains’ in a subdued market. But cash First Home Buyer New to Market Other ReEntry investors’ ability to gain market share is also helped by the fact that other buyer groups Buyer Classification – Canterbury are restricted by still-restrained credit (% of purchases) policies at the banks (which don’t impinge on cash buyers).

Around the wider Canterbury region 50% (excl. Christchurch), movers had the largest market share in Q2 (39%), followed by FHBs 40% 39% (22%), and mortgaged investors (17%). 35% Selwyn, Waimakariri, Ashburton, and 30% Timaru are all markets where movers (i.e. existing owner-occupiers who are 22% 22% 20% relocating) are key players. 16% 17% 13% 10% 10% 6% 5% 5% 5% 0% 3% 2% 2004 2006 2008 2010 2012 2014 2016 2018 2020 Mover Multiple Property Multiple Property Owner Mortgage Owner Cash First Home Buyer New to Market Other ReEntry

36 Greater Christchurch Values

Average value of housing stock – Annual and quarterly value change – Christchurch ($) Christchurch (%) $518,369 $3,925 0 .8% $500,000 35% $18,435 3 .7% $44,100 9% 30% $400,000 25% 20% $300,000 15% 10% $200,000 5% 0% $100,000 -5% $0 -10% 2005 2008 2011 2014 2017 2020 2005 2008 2011 2014 2017 2020

Christchurch’s housing affordability is better than each of the other main centres and this might make it slightly more immune to a downturn. Indeed, so far the signs of weakness are less obvious, with average values still rising, by 0.2% in June and 0.8% since March (despite some value falls in Banks Peninsula). Selwyn and Waimakariri also saw values continue to rise in Q2.

JUNE 2020 Current Value 1 month 3 months 12 months 5 years Banks Peninsula $539,096 -1 .6% -1 9%. 3 .2% 10%

Christchurch Central & North $607,304 0 .4% 1 .3% 3 .0% 9%

Christchurch East $393,126 -0 .2% 0 .4% 4 .0% 10%

Christchurch Hills $709,750 1 .2% 0 .8% 4 .5% 10%

Christchurch Southwest $492,086 0 .1% 0 .5% 3 .7% 9%

Selwyn $567,795 0 .6% 0 .8% 1 9%. 10%

Waimakariri $465,639 0 .5% 0 .9% 3 .3% 11%

37 Dunedin Market Activity

Buyer Classification – As has been the case for a few quarters Dunedin (% of purchases) now, mortgaged multiple property owners (investors) remain the key group in Dunedin, accounting for 29% of purchases 30% 29% 29% in Q2 (in a quieter overall market). That’s a 28% record high, and likely to have been driven 23% by solid capital gains and higher gross 23% 20% rental yields than in the other main centres. 20% By contrast, movers and first home buyers have been quieter in Dunedin of late. These broad patterns apply across the wider 10% 11% Otago region too, with investors still 8% 6% important in Queenstown. 7% 6% 4% 0% 2% 2006 2008 2012 2016 2020 Mover Multiple Property Multiple Property Owner Mortgage Owner Cash First Home Buyer New to Market Other ReEntry

Buyer Classification – Otago (% of purchases)

40%

30% 30% 26%

23% 22% 20% 21% 18% 17% 15%

10% 6% 6% 5% 5% 0% 3% 2% 2004 2006 2008 2010 2012 2014 2016 2018 2020

Mover Multiple Property Multiple Property Owner Mortgage Owner Cash First Home Buyer New to Market Other ReEntry

38 Dunedin Values

Average value of housing stock – Annual and quarterly value change – Dunedin ($) Dunedin (%) $547,531 35% $9,506 1 .8% $87,083 18 .9% $500,000 30% $251,483 85% 25% $400,000 20% 15% $300,000 10%

$200,000 5% 0% $100,000 -5%

$0 -10% 2005 2008 2011 2014 2017 2020 2005 2008 2011 2014 2017 2020

Dunedin property values have generally held up well since the end of March, rising by almost 2% across the city as a whole, with Taieri leading the way (2.7%). However, analysing all sales across the quarter has shown signs of weakness, down by more than 2% for Q2 as a whole.

JUNE 2020 Current Value 1 month 3 months 12 months 5 years Dunedin Central & North $558,691 -0 .6% 1 .8% 17 .3% 83%

Dunedin South $525,107 -2 .6% 0 .3% 18 .8% 84%

Peninsula and Coastal $493,532 0 .2% 0 .5% 19 .0% 77%

Taieri $575,953 -0 .2% 2 .7% 20 .1% 89%

39 CoreLogic Data and Analytics

Suburb Scorecard Buyer Classification Detailed housing market indicators down A unique and flagship product to CoreLogic, to the suburb level, with data in time series Buyer Classification classifies all purchases into or snapshot and segmented in most cases types of buyer based on their current ownership of across houses, flats and apartments. The Suburb NZ property. Used at a record level by Government Scorecard data includes key housing market metrics organisations to assist policy decisions. such as median prices, median values, transaction volumes, rental statistics and vendor metrics such To view the latest report online and subscribe to as median selling time . receive it in your inbox on a monthly basis, visit: www.corelogic.co.nz/property-market-and- Market Share Reports economic-update-report CoreLogic is in a unique position to monitor If you would like to know more or obtain tailored mortgage related housing market activity. data, analytics and insights for your business, Transaction volumes, dwelling values and mortgage please email us at [email protected] . related valuation events all comprise our Mortgage market report which provides an invaluable tool for mortgage industry benchmarking and strategy.

CoreLogic Indices The suite of CoreLogic Indices range from simple market measurements such as median prices through to our flagship house price indices – both quarterly for completeness and monthly for reactiveness. The Quarterly CoreLogic House Price Index has been specifically designed to track the value of a portfolio of properties over time and is relied upon by New Zealand regulators and industry as the most accurate measurement of housing market performance.

Sales Volumes CoreLogic tracks sales from a number of different sources to provide up to date insights on recent sale. Where applicable CoreLogic also applies estimation for expected final sales in recent months where not all sales have been collected.

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Copyright Data & Research publications This publication reproduces materials and content Whilst all reasonable effort is made to ensure owned or licenced by RP Data Pty Ltd trading as CoreLogic the information in this publication is current, CoreLogic Asia Pacific (CoreLogic) and may include data, statistics, does not warrant the accuracy, currency or completeness estimates, indices, photographs, maps, tools, calculators of the Data and commentary contained in this publication (including their outputs), commentary, reports and other and to the full extent not prohibited by law excludes all loss information (CoreLogic Data). or damage arising in connection with the Data and commentary contained in this publication. © Copyright 2019. CoreLogic and its licensors are the sole and exclusive owners of all rights, title and interest You acknowledge and agree that CoreLogic does not (including intellectual property rights) the CoreLogic Data provide any investment, legal, financial or taxation advice contained in this publication. All rights reserved. as to the suitability of any property and this publication should not be relied upon in lieu of appropriate professional advice.

Published date: Quarter 3, 2020

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