Provincial NZ property in the doldrums
The quote for the week and possibly the month for me was made by the QV research director Jonno Ingerson. On Radio NZ he stated that "the already heated house prices should continue to rise strongly for another 15 months" - Wow!
Property prices stated to rise in January 2011 - they have therefore been rising already for 30 months; could we possibly see continued growth in prices for another year-plus taking the full run of prices to 45 months! - that is optimistic. His justification seemed to be - previous up cycles tend to be of this same order - is that really a compelling case for a forecast.
I always saw QV being somewhat bearish when it came to property reporting relying as it does on data analysis and without a vested interest group to serve, but clearly that has changed.
Counter to this more bullish prospect presented by property reporting entities, other notable commentators (Bernard Hickey & Shamubeel Eaqub) rightly believe too much focus as ever is applied to the Auckland property market as if it is representative of the whole country.
The excellent article in the NZ Herald by Bernard Hickey recently titled 'Provinces left behind' summed up the fact that this property cycle has had no effect on provincial NZ. He quotes that Auckland prices have risen 13% from their 2007 peak in real terms with Christchurch up 5% but for the rest of the country real prices are down 20% in real terms and still falling. Such figures warranted more investigation.
Taking the REINZ Stratified Price Index data I delved beyond the usual stats for Auckland, Wellington and Christchurch and looked at two sub sets - 'Other North Island' which effectively measures the North Island excluding Auckland and Wellington and 'Other South Island' which excludes Christchurch from the stats from the mainland.
The charts below ably speaks for themselves - this property cycle has yet to be really felt by those provincial regions.