Market Update - May 2021
Median house prices in the lower South Island have continued to soar.
Dunedin has experienced a meteoric rise in house prices over recent years but remains a more affordable option than many North Island centres. Dunedin is a growing city with lots of new people moving there. The new hospital build, forecast to cost $1.4 billion, is adding to the momentum of a city already benefitting from large investments including the university expansion and NZ's only roofed stadium. Dunedin is also viewed as an attractive lifestyle option, with the ability to get almost anywhere in around ten minutes or so. Less time in car equals more quality time, better lifestyle, increased productivity.
In common with markets around the country, Dunedin has seen rapid strong price growth in the wake of last year’s lockdowns.
CoreLogic’s latest data shows its average property value was up by 15.4 per cent over the year to March, at $620,990. That’s an increase of $82,965 on the same time last year. The March data from the Real Estate Institute puts the increase even higher. It has Dunedin prices up by 21.5 per cent year-on-year to a record of $650,000.
Figures released for May 2021 by the Real Estate Institute of New Zealand (REINZ) show both Otago and Southland had substantial rises in median prices, up 58% and 30% respectively. Dunedin reached a record median house price last month of $621,120, up 25.5% from $495,000 last year, but the number of properties sold in the city decreased 37% from March this year.
The lack of stock is continuing to put pressure on housing in the Queenstown Lakes district.
Median house prices in the area reached $1.2 million last month, up 42.2% from $850,000 in April 2020.
In Southland, median house prices rose from $307,000 in April last year to $402,000 last month.
Market Update - March 2021
In February we saw numbers improve to where we would expect to see them for this time of year at 200, down just 10 sales on the same time last year. There is a continuation to the relentless increase in median price with a 20.6% year-on-year gain at $621,000. Median days on the market is 23 so we have returned to the fast pace that we were seeing for much of 2020.
March 2021 - Clunky attempt at fixing housing issues
Jacinda and Grant stare at each other over their lattes. "What do you think Grant?" Grant ponders. "Well, we tried to fix this by increasing supply. That didn't work". "No" Jacinda replied, staring into the distance. "Let's not bring up Kiwibuild again, or that other thing we're trying at the moment. Perhaps the government isn't the best outfit to build houses?" Grant scratches his head. "We haven't really come up with anything new". Jacinda taps her pencil impatiently. "How about this brightline thing?" Grant fidgets uncomfortably. "But we said we wouldn't. And you said you wouldn't on your watch. You know, the capital gains thing".
Jacinda stares out the window. "I'll say I didn't exactly say that. And you can say that you were being too precise when you said you wouldn't do it. We've got to do something, or we'll look like we're not very good at actually achieving anything - other than keeping our team of five million safe".
Okay - a bit tongue in cheek - but the gist of it is if you can't fix the supply issue, try pulling some levers and hope for the best. Yes, it might put some investors off and give first home buyers more space and less competition. But more likely it won't dampen competition amongst first home buyers who are facing the same problem that tax levers won't fix - lack of meaningful supply. And a complex and slow process to add new homes to the mix. Not much point worrying about stuff we can't control so best to get on with it, make the five year plan a ten year plan, and be thankful that the new rules don't apply to the family home, new builds or commercial property. And the ten-year rule isn't back-dated; this starts on 27 March 2021 with the previous timelines (five and two years) applying depending on the date on purchase (date on the agreement for the seller, date on the title for the purchaser).
I attach Tony Alexanders report this week. All seven pages are worth reading as he covers in detail this announcement and the impacts and flow on effects:
October 2020 - Housing market continues to rise
Record median house prices are being reported in nine regions - Otago has risen 20.7% to a record median of $590,000 (from $489,000 year on year) with the national median price up 14.7% to $685,000. Dunedin's median price increased to $568,000 - a record high for the city and 17% up on last year.
We all agree that house prices can't keep rising, and there will be a time that the market levels off, but that time is not now. Auckland house prices have started rising again after being stable for the past two and half years.
In simple terms the property market is governed by supply and demand. Other drivers are record low interest rates, a shortage of housing stock in a number of places including Dunedin, and a general swing in importance that people are placing on their home, with other options such as international travel closed off. In Dunedin we're seeing a continuing trend towards home improvements as new home build opportunities are reasonably limited by a lack of infrastructure, and demand for close to city suburbs. The future likely points to new residential buildings, including apartments, within our current framework as opposed to urban sprawl with both local and central government flagging an easing of restrictions.
The message today is that it is a great time to sell - and buyers are highly motivated as it may be more expensive in another year. Certainly the cost of borrowing is making home ownership the more attractive option.
Call me for advice before making your next move.
August 2020 - Buyer demand still exceeds supply
The latest housing data confirms what we at the coalface have known for the last three months - buyer demand for quality homes is outstripping supply and the market reality is that house prices are not coming back. In fact, they're going up.
Dunedin house prices were up 17.1% in June 2020 compared with a year earlier, outperforming Otago (up 11.9%) and New Zealand (7.5%). But house sales fell off — down 17% in Dunedin, compared with a 13.2% drop in Otago and a 6% drop nationally.
The shortage in supply accounts for buyer pressure for available listings — even sections are selling for a premium as demand is exceeding supply.
Dunedin is not a tourist dependent city, and the drivers underpinning the residential housing market remain steady. Another incentive for buyers are record low interest rates. Perhaps lockdown highlighted the fact that nothing is more important than your home. People are less inclined to compromise and more ready to move for the right home and location.
Give me a call is I have help you achieve your real estate dreams.
July 2020 - Our market continues to defy gravity
The market shows no sign of flagging as the latest house sale figures for June show the median price rise again and increased buyer activity, defying a lot of people’s expectations about what the market would do post-lockdown.
There have been a lot of notable sales. On a personal note, in the last fortnight I have sold 190 Somerville Street, 213 Somerville Street, 72 Every Street, and 11 Merchiston Street, all in Anderson's Bay, Dunedin. All these sales involved multiple buyer offers and exceeded price expectations.
It is a great time to sell, and slick marketing campaigns are attracting high numbers of qualified buyers.
For 11 Merchiston Street, I had 50 groups through the first Open Home
If you are looking to sell this year, Spring is looming, and it is good to be ready by end of August to be ready for September October if that is your plan.
Call me anytime to have a chat about your goals and what I can do to assist you.
June 2020 - Property is evergreen, elastic and resilient
The Dunedin property market remains very active with plenty of buyer enquiry and good numbers to open homes.
At a recent online training session for the Bayleys Group, John Bayley commented that the market today is different from yesterday, and today's market won't be the same as tomorrow. Wise words. The only constant is change, and we have to adapt.
I can reflect, from experience, having worked at the coalface through the GFC in 2007-08, is that the New Zealand property market is extremely resilient. It is also, as Mike Bayley commented, an evergreen market. Our housing stock is permanent, stable and essential. It doesn't have a shelf life and doesn't fluctuate like other markets day by day. There's a solidity to the property market. With property, you're actively involved in decisions as opposed to being a bystander.
Moving forward, first home buyers will be looking to enter the property market and this will keep things moving up the chain. And why wouldn't you with interest rates at record lows (ASB 2.69% for 2 years) and loan to value ratios having been removed for first home buyers and investors. Investors will be seriously looking at property as there's little point putting spare cash in the bank.
On a real estate note, more than ever marketing experts are required to reach the audience and tie the deals together.
An experienced agent can provide an anchor in these times. The past 14 years in real estate after 5 years in the private sector and 10 years in the public service have taught me many valuable lessons.
Experience counts and you can count on me. Contact me anytime for a chat.
House prices in Dunedin rise 20.8% - February 2020
Dunedin's house values are up by more than 20% on last year, which is more than double the increase in any other main centre, according to new figures. The average house price in Dunedin is now at $550,000 - a record median price and well ahead of Christchurch's average value of $510,575.
Quotable Value’s [QV] House Price Index data for January has Dunedin’s houses up 8.4% from just three months ago.
QV senior consultant Tim Gibson said there had been significant interest in all levels of the market in Dunedin, especially for two-bedroom units ‘‘as people look to downsize’’.
“We have seen some significant growth at the top end of the market with higher demand for $1.5 million-plus properties, driven by regional confidence and low interest rates,” QV senior consultant Tim Gibson said.
Real Estate Institute figures back that up. According to its Million Dollar Price Report, sales of houses in Otago worth more than $1 million rose 14.3% to 528.
Mr Gibson said local and out-of-town investors were entering the market, as were more young investors.
And they were taking risks to snatch up houses on offer.
“To increase the likelihood of their offer being accepted, potential purchasers are now placing emphasis on non-conditional offers, completing due diligence following acceptance.”
At a jump of 20.8% on last year, Dunedin is well ahead of the next main centre, Wellington, which had an increase of 9%.
Mr Gibson said long-term projects such as the new Dunedin hospital were driving demand.
Nationally, house values were up 4.4% to an average of $714,747.
The Queenstown-Lakes region had the smallest increase of all QV’s 16 designated main centres, up just 0.1%.
from my desk - market commentary
The Dunedin property market continues to remain extremely buoyant, with strong buyer interest reflected in high attendances at Open Homes and most properties being sold with multiple buyer offers. As a result most marketing campaigns are short, and very busy. The fundamentals remain the same; premium presentation and promotion will result in a premium sale. Quality property information is also critical and results in increased buyer interest, more competition, unconditional offers, and a higher sale price. I'm receiving very positive feedback from buyers about the ease of accessing property information, including a video tour, via my website.
There are a number of key factors that explain why Dunedin property values continue to rise. The governments decision to scrap the capital gains tax proposals last year has definitely seen investors return to the property market, and Dunedin's yields are more attractive than many other main centres. The recent drop in the official cash rate is seeing record low interest rates on offer. Dunedin's core businesses, the university, hospital and schools, continue to attract people to Dunedin, where we enjoy a better lifestyle. Compared to Auckland, and other main cities, property prices are comparatively more affordable. So all the indicators that underpin our market are positive. Finally, the fact that property values are increasing at a faster rate than any other main centre (20% gain over the past year) is in itself an incentive for buyers to get in, before prices are even higher in another year. So buyer motivation is in itself driving house prices further up.
The new hospital build, and other large infrastructure projects bode well for the Dunedin economy. Technology success stories such as Dunedin's RocketWerkz point to a new business direction that fits our local economy; where distance from markets becomes irrelevant, the product doesn't require shipping, synergies with our education and knowledge economy fit well, and people can enjoy a better work-life balance.
Dunedin is on trend with families returning here, or moving here, for schooling and a better quality of life. No sitting in traffic for hours. Central Otago only a drive away. Lots of space and fresh air. Dunedin has everything you need in a great little city and with the lower cost of living, you can take that holiday every winter.
Whether you're buying or selling getting the right advice is gold. Feel free to contact me for a chat.
Why Dunedin is New Zealand's Best Little City
Dunedin is booming
The timing couldn’t be better for business to capitalise on new opportunities. Both the University and the Polytechnic are investing in significant development upgrading their campuses. A $1.4B rebuild of Dunedin Hospital is due to commence around 2020. Early indications are that around 1,000 people will be needed in the city to assist in this project. Local Advisory Group convenor and former MP Pete Hodgson said the boom in the construction industry would not stop in 2026 when the hospital was completed. The University of Otago, Otago Polytechnic and the Dunedin City Council would be deliberately scheduling work for the years after the hospital build. “All this means that Dunedin’s construction sector is moving from a lower level of activity historically to a somewhat higher one for the next 12 or 15 years. “It isn’t going to be a boom and bust so much as one long and drawn-out boom.” (Source: www.odt.co.nz 18th July 2018)
Dunedin is a region of unique landscapes, is culturally rich, artistic, and has great heritage buildings
Enjoy getting close to rare wildlife and soaking up the quirky city vibe. Known as the Edinburgh of New Zealand, Dunedin is the country's city of the south, wearing its Scottish heritage with pride. Surrounded by dramatic hills and at the foot of a long, picturesque harbour, Dunedin is one of the best-preserved Victorian and Edwardian cities in the Southern Hemisphere. The accommodation is good and plentiful; the nightlife buzzes with funky bars and delicious restaurants and the natural attractions are unique and fascinating.
Dunedin is a confident commercial centre with a global focus and a strong emphasis on design and innovation, underpinned by cohesive business connections and a burgeoning talent pool. The city is enriched by successful businesses that produce cutting-edge products and services selling into global markets over a sustained period.
Strong knowledge base
As a city, Dunedin is fortunate to have acclaimed educational institutions and a number of businesses with strong research networks and a robust focus on R&D. Students, academics and entrepreneurs all contribute to:
the internationally recognised research capability of the University of Otago
the product development and market-testing expertise of the Otago Polytechnic
high investment in R&D by local industries.
Innovation and talent
Dunedin people are smart and resourceful, and this is a youthful city. Health technologies and biotechnology, niche manufacturing and engineering, ICT and creative industries have all grown over the past decade, benefitting from a workforce of educated, talented people.
As at June 2012, 70.7% of Dunedin’s population were of working age (15–64) compared to 66.1% of New Zealand’s population. (Statistics New Zealand 2012)
The style of doing business is open and relaxed, based on personal reputation and integrity. Dunedin’s small size makes it perfect for creating and fostering networks.
Dunedin's residents enjoy a high standard of cultural, leisure, public and natural amenities. The city boasts an enviable range of parks, reserves, tracks and cycleways. Our world-class venues and community facilities cater for everything from sporting events to concerts, exhibitions to festivals. And we have New Zealand’s largest collection of heritage buildings, some creatively restored for commercial and residential use, others enjoyed as churches, theatres and galleries.
A great lifestyle - and awarded most beautiful New Zealand city 2018
Dunedin has a strong sense of place and cultural heritage, held together by active social networks and a commitment to local community. It’s easy to get around the city, and the housing is affordable.
Residents say housing is the most affordable in the country and also rate the city as having the greatest sense of community, with 84% of those surveyed feeling they had a positive overall quality of life. (Quality of Life Survey 2014)
The average travel time for vehicles on key suburb to city routes at peak times during the morning shows the average travel time on the four key routes measured is less than 15 minutes. (Dunedin City Council Annual Plan 2013/14)
Nourished by a stunning natural environment with more green space per person than any other city in New Zealand, Dunedin residents enjoy the benefits of a focus on environmental sustainability.
Dunedin has a fantastic food scene - click on the link below to check out this review: