Property Investment
3 min read
Author: Andrew Nicol
Managing Director, 20+ Years' Experience Investing In Property, Author & Host
New house price data just out this morning shows that house prices are on the up in one of our largest cities.
But if you only look at the national average, the property market looks flat. Basically, no movement at all.
But that national average hides the fact that the property market downturn is over for some parts of New Zealand … and is still on for other parts.
I track property values in 40 of the largest areas in the country. 5 have now fully recovered.
That means even if you bought at the absolute peak of the market, your house could be back at (or above) its previous high.
And our 2nd largest City, Christchurch, just joined the fully-recovered club.
If we take Christchurch as an example … house prices there peaked in February 2022. They then fell 11%, bottoming out in June 2023.
But, since then, they're up 12%.
That's a compounding average of 4.4% per year since the bottom of the market.
Let’s say you bought a property for $500,000 at the peak in Christchurch and it followed the market exactly. It would have dropped to $446,000. But, today it would be worth $501,000.
It's not going to make you laugh all the way to the bank. But it's a recovery.
House prices in Invercargill City peaked in January 2022, dropped 11%, and have since bounced back 22%.
That's a compounding gain of 7.4% per year since the bottom.
To be really clear, I am not saying to “go out and invest in Christchurch or Invercargill”.
I'm sharing this because some people think that the property market will never recover.
And here we’ve got some markets recovering, even though the national average is not moving yet.
It's tempting to say that house prices are going up in these areas because they are more affordable.
But then Queenstown has also fully recovered – and it never really went through a downturn at all.
And that’s the most expensive place to buy a house in the country.
For Invercargill and Southland, dairy prices are likely playing a role. Farmers are getting strong payouts right now. That brings more money into the local economy.
For Christchurch and Ashburton, my numbers say they were undervalued … so they had room for catch-up growth.
For Queenstown … well, it's Queenstown.
I don’t tell you this to say that house prices are going up everywhere. They’re not.
Lower Hutt is a different story. House prices there have fallen 32.3% since the peak and have barely lifted. The technical bottom was only two months ago, and prices still appear to be falling.
That’s good for some people … and bad for others.
Here's the thing most people don't think about.
A fully recovered market is great news if you already own property there. Your equity is back. You can breathe again.
But if you're a buyer? You've missed that early window.
Christchurch two years ago was ~11% cheaper than it is today. Invercargill was ~22% cheaper.
Those were the buying opportunities – and they happened when the headlines were at their most negative.
Now flip it around. Auckland is down 22%. If you're a current homeowner there, that's painful.
But if you're a buyer looking at Auckland right now, you're getting properties at prices you couldn't have touched 4.5 years ago.
If you’re keen to see what’s happening in your area … use this interactive map.
Hover over your area and see how far prices are below their peak, when they bottomed out, and how big the bounce back has been.
Managing Director, 20+ Years' Experience Investing In Property, Author & Host
Andrew Nicol, Managing Director at Opes Partners, is a seasoned financial adviser and property investment expert with 20+ years of experience. With 40 investment properties, he hosts the Property Academy Podcast, co-authored 'Wealth Plan' with Ed Mcknight, and has helped 1,894 Kiwis achieve financial security through property investment.
This article is for your general information. It’s not financial advice. See here for details about our Financial Advice Provider Disclosure. So Opes isn’t telling you what to do with your own money.
We’ve made every effort to make sure the information is accurate. But we occasionally get the odd fact wrong. Make sure you do your own research or talk to a financial adviser before making any investment decisions.
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