Property Market Continues to Slow

Property Market Continues to Slow
Tuesday, 18 July 2006, 4:51 pm
Press Release: Quotable Value New Zealand
Media release
9 July 2006
Property Market Continues to Slow

QV’s residential property statistics released today indicate that nationally, property values increased by 11.5% (calculated over the three months ending June 2006 in comparison to the same period last year). This is down from the 12.4% growth reported in May, and down from 16.8% growth reported in January. The average New Zealand sale price was $328,829 for this period.

“New Zealand’s residential property market continues to cool with the growth rate decreasing for the fifth consecutive month. The 11.5% growth rate is still well above historic levels with many centres still recording growth rates in excess of 20%” said QV spokesperson Blue Hancock.

The main cities have again seen slight decreases in the growth rate, Hamilton down to 19.2%, Christchurch 11.3%, Wellington 10.5% and Auckland 6.7%. Dunedin showed the lowest growth of 5.8%.

In the provincial cities Whangarei 23.0%, Gisborne 24.2%, Invercargill 14.0% and New Plymouth 11.0% all reported decreases in the growth rate for the period ending June 2006.

The following regional areas showed a consistent growth rate to that reported in May; Masterton 22.1%, Marlborough 10.9%, Western Bay of Plenty 18.8%, Manawatu 16.7% and Tasman 7.8%.

…ends/

Auckland:

Auckland City property values have shown growth of 6.7% (calculated over the three months ending June 2006 in comparison to the same period last year), down from the 7.6% growth reported in May. The average sale price was $518,962.

Growth rates reported for the June 2006 period within the wider Auckland market continue to show signs of easing when compared to May 2006, Manukau 13.6%, North Shore 9.0%, Waitakere 9.4% and Papakura 12.6%.

“Recent activity within the market place is somewhat patchy, with some sectors of the market continuing to perform well, and areas showing less activity. Properties on the whole are taking longer to sell, but sales are taking place where vendors expectations are realistic. Overall we are now seeing people proceed with more caution than they have in recent times, and making their purchasing decisions based on greater levels of research” said Glenda Whitehead of QV Valuations.

Hamilton:

Hamilton residential property values increased by 19.2% (calculated over the three months ending June 2006 in comparison to the same period last year), this was down from 21.5% growth reported to May. The average sales price for Hamilton City was $310,775.

“Hamilton has shown a decline in growth for the last five months, although growth appears to be slowing there is still demand for most types of residential property in Hamilton where vendors expectations are realistic” says Richard Allen of QV Valuations.

Wellington:

Wellington City’s property values have shown growth of 10.5% (calculated over the three months ending June 2006 in comparison to the same period last year), down on the 11.8% reported in May. The average sales price in Wellington City was $430,883.

“Winter is usually a slower time for the Wellington property market but this is certainly not the case this year. We have high levels of activity and value increases are higher than at the same time last year. Hutt City is showing the strongest growth of 17.5% up on the 16.2% reported in May” said Max Meyers of QV Valuations.

Christchurch:

Christchurch property values grew 12.7% (calculated over the three months ending June 2006 in comparison to the same period last year), down on the 13.8% reported in April. The average sales price for the city was $313,388.

“The majority of Christchurch cities residential sales continue to fall within the $200,000 to $300,000 price bracket with sales volumes remaining steady” said Mark Dow of QV Valuations.

“Average prices have generally eased upward over the last month although we suspect this is more likely to be due to a shift in the type of property selling rather than any noticeable shift in the market price” said Mark Dow.

Dunedin:

Dunedin residential property values have grown 5.8% (calculated over the three months ending June 2006 in comparison to the same period last year), down from the 8.2% increase reported for the period ending May 2006. The average sale price was $248,482.

“The latest figures for Dunedin City show a continuation of the slow down reported last month. These figures are in line with previous predictions of a gradual easing in the residential market. These results also reflect the impact of rising interest rates and the general economic outlook over the medium term” says David Paterson of QV Valuations

There are varying growth levels in different parts of the city. The Central and Northern areas increased by 0.4% over the three months ending June 2006 in comparison to the same period last year Whereas Taieri, Peninsular and coastal Dunedin have grown by around 11% over the same period. This may be a reflection of an easing in value of some of the poorer housing stock, especially in North Dunedin.” says David Paterson.

QV RESIDENTIAL PRICE MOVEMENT REPORT - as at June 2006

City / Region June 2006 Property Value Growth % May 2006 Property Value Growth % June 2006 Average sale price
(Annual % Change) (Annual % Change)
Far North 12.8 14.4 $282,961
Whangarei 23 24.3 $313,111
Kaipara 22.8 20.8 $247,605
Rodney 8.9 8.7 $448,605
- Hibiscus Coast 7.5 8.2 $458,487
- Rodney (North) 11.6 10.3 $431,560
North Shore City (A) # 9 9.6 $491,111
- Coastal North Shore 9.2 9.5 $559,698
- North Shore Onewa 7.4 8.6 $408,471
- North Harbour 7.1 7.9 $495,661
Waitakere City (A) # 9.4 10.4 $358,842
Auckland City (A) # 6.7 7.6 $518,962
- Auckland City (Central) 1.5 3.7 $471,743
- Auckland City (East) 6.1 6.4 $660,486
- Auckland City (South) 7.9 8.5 $441,072
- Islands 23.9 23.8 $508,487
Manukau City (A) # 13.6 14.1 $370,660
- Manukau East 11.7 11.5 $484,277
- Manukau Central 15 15 $294,638
- Manukau North West 16.5 18.2 $329,609
Papakura (A) # 12.6 12.5 $310,708
Franklin 18 16.9 $330,412
Thames Coromandel 5.3 5.8 $450,222
Hauraki 20.6 21.7 $225,329
Waikato 19.9 24.3 $243,228
Matamata Piako 18.5 26.8 $247,663
Hamilton # 19.2 21.5 $310,775
- Hamilton North East 15.2 18.8 $398,957
- Central City/North West 20.3 22.9 $298,089
- Hamilton South East 18.6 20 $289,315
- Hamilton South West 21.6 24.1 $281,403
Waipa 24.4 23.8 $298,938
Otorohanga 41.1 33.2 $191,240
South Waikato 25.6 30.4 $117,563
Waitomo 40.4 40.4 $141,669
Taupo 4.2 8.3 $324,822
Western Bay of Plenty 18.8 17.8 $381,383
Tauranga # 5.7 6.9 $389,192
Rotorua 28 28.7 $231,527
Whakatane 14 15.4 $274,489
Kawerau 19.1 28.3 $123,412
Opotiki 11 12.1 $173,630
Gisborne 24.2 28.7 $231,950
Wairoa 16.9 24.2 $91,125
Hastings 11.4 11.9 $268,983
Napier City # 9.6 10.3 $336,968
Central Hawkes Bay 16.7 13.8 $223,048
New Plymouth 9.8 11 $283,986
Stratford 25.1 N/A $177,976
South Taranaki 16.9 19.8 $164,917
Ruapehu 48.2 46.4 $136,756
Wanganui 17.5 21.5 $182,540
Rangitikei 29 29.9 $135,164
Manawatu 16.2 15.8 $202,582
Palmerston North # 16.7 17.5 $251,944
Tararua 26.8 25.6 $133,302
Horowhenua 21.2 19.6 $185,362
Kapiti Coast 14.8 14.9 $295,656
Porirua (W) # 12.3 12.4 $340,690
Upper Hutt (W) # 19.8 20.3 $270,542
Lower Hutt (W) # 17.5 16.2 $297,488
Wellington City (W) # 10.5 11.8 $430,883
- Wellington City & Southern 9 11.1 $428,903
- Eastern Suburbs 8.4 9.6 $504,775
- North Wellington 13.4 14.4 $387,682
- Western Suburbs 10.5 11.5 $449,584
Masterton 22.1 21.9 $212,677
Carterton 19 19.1 $235,712
South Wairarapa 11.6 11.9 $248,469
Tasman 7.8 6.8 $333,440
Nelson # 3.1 3.5 $331,985
Marlborough 10.9 10.8 $299,574
Kaikoura 14.2 16.1 $349,463
Buller 15.4 19.5 $141,145
Grey 20.5 24.6 $182,823
Westland 27.3 28 $203,646
Hurunui 7.8 8.8 $269,051
Waimakariri 10.8 11.8 $280,175
Christchurch City # 11.3 12.7 $316,948
- East 11.7 13.2 $267,483
- Hills 10.3 11.3 $449,095
- Central City and North 11.3 11.8 $358,028
- Southwest 11.8 13.8 $292,556
Banks Peninsula 26.9 23.9 $364,401
Selwyn 17.8 16.4 $311,856
Ashburton 23.9 26.2 $208,304
Timaru 13.2 13.5 $201,519
MacKenzie 17.2 26.9 $219,547
Waimate 24 13.6 $119,278
Waitaki 5.9 7.9 $168,585
Central Otago 7.5 7.8 $254,329
Queenstown Lakes 5.3 5.5 $509,306
Dunedin # 5.8 8.2 $248,482
- Central/Northern City 0.4 5.4 $252,897
- Peninsular/Coastal Dunedin 11.2 10.1 $199,256
- Southern City 8.2 7.7 $242,455
- Taieri 11.3 13.1 $269,532
Clutha 28.9 28.3 $145,618
Southland 6.3 4.4 $141,926
Gore 9.5 7 $108,857
Invercargill # 14 15.5 $144,835

Total NZ 11.5 12.4 $328,829

Auckland Region (A) 9.1 9.8 $435,048
Wellington Region (W) 13.1 13.6 $363,138
Main Urban Areas # 10.3 11.2 $367,909

Notes on the above data:

If a City or Region is shown in italics with an * this indicates the values for this area may not be statistically accurate as they are based on a low volume of sales.
N/A - indicates that either there were too few sales to report a Property Value Growth % or that the data for this period was unavailable

The information included in the above table is calculated based on the sales data entered into QV's system for the previous 3 month period. For example, information for the period ending June will be calculated based on sales entered between April 1 and June 30.

Property Value Growth is the annual % change in residential property values, calculated using QV's House Price Index methodology. The residential sales entered into QV's system for the previous 3 month period are compared to the same period of the previous year to identify the annual percentage change in residential property values. Average sale prices are calculated based on residential sales entered into QV's system for the previous 3 month period.

Residential Price Movement
Questions and Answers:
The following information is provided as background to the Residential Price Movement statistics.

1. What is the Residential Price Movement Report?

The Residential Price Movement Report is a new set of residential property statistics that provides an estimate of the change in residential property values over the previous 12 months for areas throughout New Zealand. Residential sales compiled by QV for the previous 3 months are compared to the same period of the previous year to identify the annual percentage change in residential property values. The residential sales included are for residential houses, apartments, flats, home and income properties, and houses converted to flats.

2. Why has the Residential Price Movement Report been developed?

The Residential Price Movement Report has been developed to provide a timely indicator of residential property value movement, using the latest residential sales data compiled by QV for the previous 3 month period.

QV has previously only released property statistics quarterly. QV’s measure of price movement has been the Quarterly House Price Index (QHPI). The QHPI only includes sales that have been notified to the Territorial Authority that sold within the quarter. As sales of properties can sometimes take 4-6 weeks to settle, the QHPI is released after an extended period to incorporate as much sales activity from the quarter, which results in increased statistical accuracy, but also a less timely output.

As the Residential Price Movement Report uses the sales compiled by QV over a 3 month period, rather than the sales that necessarily sold within that period, the Residential Price Movement Report can be released on a more frequent basis, providing a timelier indicator of property value movement. The Residential Price Movement Report also includes sales activity in other residential property sectors including apartments and flats.

3. How frequently will the Residential Price Movement Report be released?

The Residential Price Movement Report data will be available to the media on a monthly basis. It will be released to the media for publication on either the second or third Monday of each month.

4. How current is the Residential Price Movement data?

The data contained in the Residential Price Movement Report is based on the residential sales compiled by QV for the previous 3 month period.

For example, the Residential Price Movement Report as at January 2005 will include sales compiled by QV up until 31 January 2005 and include sales compiled since 1 November 2004.

5. Why does the Residential Price Movement Report include sales compiled by QV over a 3 month period?

Sales are included over a 3 month period rather than a single month to ensure that there are sufficient sales volumes to calculate statistically accurate property value growth.

6. How is the Residential Price Movement data calculated?

The Residential Price Movement Report includes two indicators of property value; the property value growth, and average sales prices.

Property Value Growth
The Property Value Growth uses QV’s House Price Index methodology, which generates a residential index for each area by recognising the sales price of each property sold compared to its capital value. This ensures the index provides a measure of change in property values, without fluctuations caused by higher sales volumes in one or more property sectors (e.g. high volumes of apartment sales or investment properties).

Residential sales compiled by QV for the previous 3 month period are compared to the sales compiled by QV for the same period the previous year to identify the annual percentage change in property values.

Average Sales Prices
The Average Sales Prices calculated in the Residential Price Movement Report are based on residential sales compiled by QV for the previous 3 month period.

7. Does property value growth reflect a change in average sales prices?

No. Property Value Growth does not reflect a change in average sales prices, which are only given to enable a comparison of sale prices for one month compared to the last. Property Value Growth uses QV’s House Price Index methodology to generate a residential index for each area by recognising the sales price of each property sold compared to its capital value.

8. Why does QV recommend using the Property Value Growth rather than Average Sales Prices to verify the change in property values over time?

Average Sales Prices are only provided in the Residential Price Movement Report as a broad indicator of property values in an area to assist comparisons between areas. QV recommends referring to the property value growth to verify change in property values over time, rather than the average sales price, as the average sales prices can be impacted by the types and categories of properties selling, or low volumes of property sales.

9. When was the Residential Price Movement Report first released?

The Residential Price Movement Report was first released for the period ending January 31 2005. The QV Quarterly House Price Index, which measures the movement of house values over time, is available back until 1989. QV is also able to produce statistics using its database going back to 1985 for most areas.

10. Why does the Residential Price Movement Report provide an ‘estimate of property value’ only?

Data in the Residential Price Movement Report provides estimates only of property value, and should not be considered ‘final’ statistics, as not all sales for the 3 month period will be included due to the time the data is released. This is because some sales within the 3 month period will not have been notified to the Territorial Authority in time for inclusion in the Residential Price Movement Report data. Notification of the sale to the Territorial Authority does not occur until after the sale has been settled and documents forwarded by the solicitor. This generally introduces a lag of 4 to 6 weeks before the Territorial Authority records the sale.

QV produces final property statistics which are released after an extended period to incorporate a greater level of sales activity, resulting in a more statistically accurate output. Final property statistics, including the QV Quarterly House Price Index, can be purchased online at www.qv.co.nz.

11. Why do some Territorial Authorities show ‘N/A’ (Not Available)?

Territorial authorities may show ‘N/A’ if there is insufficient data available at the time of publication to produce statistically accurate outputs. This may occur when there has been very low sales activity in an area, or alternatively when QV has not been supplied sufficient residential sales volumes by a Territorial Authority for a particular period.

12. Why does QV caution against using statistics with low volumes of sales?

Statistics based on low sales volumes should be used with caution, as low volumes of sales are insufficient to create statistically accurate outputs. Any statistics calculated based on sales volumes of less than 50 sales appear in Italics in the Residential Price Movement Report data.

13. How are the regions and city areas defined?

Property Value Growth statistics are provided for each council area throughout New Zealand. Five main urban areas (Auckland, Hamilton, Wellington, Christchurch, and Dunedin) also have property value growth statistics available for areas within the cities. These city areas have been defined through consultation with QV Valuers that have local knowledge of each area.

Property Value Growth Statistics are not provided for individual suburbs, as most suburbs have insufficient sales volumes to ensure statistically accurate property value growth calculations.

14. Where does QV source the property data?

QV maintains a national database on Property Information that it creates by sourcing updates of the District Valuation Roll from all NZ Territorial Local Authorities/councils.

ENDS

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