Best and worst performing areas since the peak

10 November, 2010

Since property values reached their peak in late 2007 to early 2008, values began to fall, and in some areas have since regained some of those losses. Using the QV residential price movement index we can measure the change in value between the peak of the market and today. Across New Zealand, values are now 5.5% below their peak. But when we look at each of the local council areas (Territorial Authorities) we can see that some have fared better than others.

Top performers

Top of the list of best performing areas is Gore District. Values in Gore are now only 1.5% lower than they were at the peak of the market in May 2008. Values in Gore dropped from mid 2008 to mid 2009, but this drop was less than in most other areas. Since then, values have increased more than anywhere else apart from Auckland City.

So why has Gore performed so well? Gore is the major rural servicing town for the Southland Province outside of Invercargill, and has been buoyed by a strong dairy industry in the area. There is also significant industrial development planned for the Gore District in the near future. Solid Energy has established plans to build a new open cast coal mine and a factory near Gore over the next ten years. This development is projected to bring in 3000 jobs during the construction phase, and 1500 permanent jobs once up and running, and many of the workers will base themselves in Gore.
Auckland City was the next best performing area at 2.1% below peak. Values in Auckland City did drop significantly from the peak, but have since recovered more than anywhere else in the country.

Of the other main cities, North Shore, Manukau and Dunedin filled spots 8 to 10 with drops of 3.4% to 4.5%. Like Auckland City, property values in these cities fell significantly during 2008 and early 2009 but have since rebounded strongly.

The provincial centres of New Plymouth and Nelson took spots 5 and 6, with both dropping relatively little from the peak and since recovering well.

The more rural areas of Tasman, Waimakariri and Selwyn filled out the rest of the top 10 and showed a similar pattern of modest drop from peak with a solid recovery since.

Worst performers

At the other end of the scale, there are a number of Territorial Authorities where values have continued to drop from the peak, with little or no recovery in 2009.

Gisborne is the worst performing part of the country, where values are currently 20.6% below the peak of the market in August 2007. There was a slight recovery in late 2009 but values have dropped throughout 2010 and are now at their lowest point since the peak.

Tauranga is the only main centre in the bottom 10, coming in at number 9, although Hamilton and Rotorua only just missed out as numbers 11 and 12. After dropping from their peak in October 2007, values in Tauranga recovered only marginally in late 2009 before gradually sliding to their current point 11.4% below the peak.

Whangarei shows a similar pattern to Tauranga with values recovering marginally in late 2009 before sliding to their current point.

In Queenstown, values dropped from late 2007 through to a low in October 2009. There was a sudden recovery through until early 2010 but since then values have continued to slide and now sit 14.9% below the peak.

Franklin also reached its lowest point in late 2009 before recovering slightly, but values have declined over the last few months and values are currently only just above their lowest point since the market peak.

All the other areas in the list are at their lowest point since the market peak and are likely to continue to drop further over the coming months.

Source: Jonno Ingerson - Research Director, PropertyIQ