Best Performing New Zealand Suburbs in the 2020 & Real Estate Market Outlook 2021
By Hadar 1st Feb, 2021
The new year came bearing great beginnings for property owners in New Zealand, with a noticeable uptick in capital values. As per latest industry research reports, the property owners of Herne Bay occupy the top of the pyramid with a median value of $2,681,650. Kawerau also boasts of the highest five-year change in median values- a magnificent 200.7%. Outer Kaiti, Gisborne also impressed with the highest 12-month change in median value. However, these localities were not alone in their fortune. Reports confirm that even the lowest-performing areas still clocked in decent values in their market performance metric.
Which suburbs performed the best?
Auckland now stands at 117 suburbs that have a median property value of $1 million, at the very least. Median property values in Mount Maunganui witnessed a rise to $1.01 million, as well, which meant Tauranga gets to be a part of the $1m+ collective too. Wellington and Christchurch also boast of twelve and four $1m+ suburbs, respectively.
There has been a slew of new entrants to the million-dollar club, and best of all, not all of them even conform to the trend of being a main center suburb; case in hand, Gisborne in Outer Kaiti, which has demonstrated a 39.7% increase (to $335, 900). The top four suburbs with the highest median values, in fact, are all located in Gisborne. At least 46 suburbs have demonstrated an increase in their median value by $100,00, and 33 of them are located in Auckland alone.
2021 Real Estate Market Outlook
If the pre-lockdown sales records are to be taken as an indicator, the signs of strengthening prices were always there- falling mortgage rates, dropping property asset inventory numbers, etc. The Government played its part with generous cash infusions in the form of wage subsidies; and, the Reserve Bank sanctioned delayed capital requirements, omission of loan to value ratio rules, quantitative easing, etc. Trading institutions allowed mortgage payment deferrals as well.
- Herne Bay comes out on top as the highest-priced median property value of $2.68m;
- Auckland Central projects lowest median value at $548,000;
- 3 suburbs clock a median value <$600,000;
- 117 suburbs at $1m, at least;
- and four at least $2m;
- The suburbs of Shamrock Park and Manurewa East project the highest value appreciation 13.9% and 11.4%, respectively;
- Shamrock Park’s median values rose by almost $231,000, the largest rise in dollar terms
- More than 30 suburbs witnessed a median value rise by at least $100,000 in 2020.
- Harrowfield projects highest median property value of $899,700;
- Flagstaff closes in at second place with $863,400;
- Bader is the cheapest ($461,550);
- Deanwell witnessed the highest value spike with 15.2%, followed by 7 more suburbs with double-digit value increment.
- Queenwood scored the highest dollar gain with $80,200; and,
- Whitiora, the smallest gain, at $21,550.
- Mount Maunganui is the most expensive suburb at$1.01m;
- Parkvale is the cheapest at $523,150;
- Matua witnessed a 3% value hike and had the largest dollar gain, at $102,600.
Wellington (covering Wellington City, Porirua, Lower Hutt, Upper Hutt)
- Seatoun is the priciest suburb around wider Wellington, at $1.50m. There are 12 +$1m suburbs, and only two with values less than $500,000;
- Each suburb has seen values rise in the past year, with the top being Totara Park, with a rise of 22.7%. Three suburbs have seen a dollar rise of at least $100,000 in the past year, including Totara Park, Kelson, and Riverstone Terraces.
- Scarborough is the highest-grossing suburb with $1.20m;
- Phillipstown, the cheapest, at $304,850;
- There are four +$1m suburbs in total, in Christchurch;
- North New Brighton depicted 7.9% growth and Westmorland the largest in dollar terms $30,700.
- Maori Hill is the costliest suburb $867,900; and, the highest dollar gain at $104,350.
- South Dunedin, the cheapest, at $373,550- the only sub-$400,000 suburb;
- Every suburb has exhibited double-digit hikes with Liberton scoring 22.6%;
What’s in store for 2021?
2020 closed with transactions range between 85000-90000 property units- which is on par with the long-term average. The positive factors have ousted the predictions of average property values dropping by 15-20%, and indicate firmly to at least a 10% hike. The present market trends are bound to continue for at least the first half of the year, with stricter regulatory measures possibly kicking in later 2021.
Extensions for the Brightline Test, a capital gains tax for investors selling under five years, and debt-to-income ratios for new mortgages are on the horizon. The prospective Loan-to-Value-ratio speed limit is due to be in action by March 1st; while it may not affect all owner-occupiers, some investors will now have to find a 30% deposit instead of 20%. Market momentum can push the investor deposit requirements further up.
The wage subsidies and mortgage deferrals are less of a worry for now. Lower-than-projected unemployment rates and mortgage deferrals also make the market favorable for now. Thus, projections indicate a further increase in property value by another 15-20%.
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