While standalone house prices are starting to pick up in many areas, growth of townhouses and flats is patchier. Photo: RNZ / Nate McKinnon
Property price increases seem to be coming first to the cheapest suburbs - but not so much to townhouses.
Cotality has released new data at a suburb level, which shows that the value of standalone houses is starting to pick up in many areas. But growth of townhouses and flats is patchier.
In the three months since March, prices stayed flat or rose for standalone houses in 62 percent of suburbs. Elderslie in Waitaki, Ngataki in the Far North and Evansdale in Dunedin were among 78 suburbs with house value growth of at least 5 percent.
Cotality noted they were all areas with median values below $650,000.
In the main centres, Kelburn in Wellington was up 4.1 percent, Temple View in Hamilton up 3 percent and Litle River near Christchurch up 3.1 percent. Bethells Beach, Auckland, was up 3 percent.
But only 54 percent of suburbs recorded townhouse and flat values holding steady or rising and only 16 percent recorded growth of 2 percent or more.
Areas of note were Waikouaiti, near Dunedin, up 6.8 percent; Chedworth, in Hamilton, up 4.8 percent; Onetangi, in Auckland, up 4.2 percent; and Eastbourne, Wellington up 3.9 percent.
Forty-two suburbs had drops of 3 percent or more in townhouse values.
Cotality property economist Kelvin Davidson said with data to such a level of granularity, there could be variability. But he said it seemed that areas where prices were a bit cheaper were increasing the most.
"You look around some parts of Clutha, Dunedin and you know the West Coast, these sorts of areas that that do have lower house prices have seen have slightly stronger growth."
They were also often provincial areas where increased farm income could be helping.
"Small towns that are rural and perhaps have a bit more money sloshing around at the moment and some people who are keen to pay a bit more for houses."
Auckland, Christchurch and parts of Wellington had a boom in townhouse development, and that could be restraining price growth, he said.
"Over the next kind of year or two, the townhouse development pipeline is slowing down and the construction sector has been slowing down for about three years now.
"So that pipeline actually being completed and being available to the market isn't as big as it was. But there have been previously a lot of these properties built and there's still some coming through."
That supply could constrain price growth, but he said values were generally not falling.
"People are keen to buy them as new properties, you obviously have lending incentives to look at new builds, in terms of [exemptions from] debt-to-income ratios and loan-to-value ratios, so that I think there is a there is still a demand for that type of property and also I guess it's hard to measure and it's slow moving but you know societal change … people are more happy to buy a townhouse now, previously they might have wanted a stand alone.
"Whether it's necessity or choice, I'm not sure, but either way I think the fact that townhouse values more or less held up suggests that there is a degree of demand in relation to supply."
He said the high number of listings and uncertainty on the labour market were likely to limit price growth in the market overall in the near term.
"The bigger picture is still that things are pretty subdued out there. You know the downtown might be over, but the upturn is hard to get into any sort of stride."
Cotality data showed that some areas are more affordable than they typically have been. In Wairoa, it currently takes 30 percent of median household income to service an 80 percent mortgage on a median house price, but the historical average was 40 percent.
Kaipara is 8 percent more affordable at the moment than average, the Far North 6 percent, Kaikōura 6 percent and Marlborough 5 percent.
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