Property values continue to recover

Media release
9th October 2009

Embargoed to Midnight Sunday, 11th October 2009

Property values continue to recover

Property values have continued to increase according to the QV residential property indices for September released today. Nationally, values are now only 1.1 percent below the same time last year, up further from the -2.8 percent reported last month.

Nationwide values are now 2.7 percent up from their low in April, but remain 7.1 percent below the market peak of late 2007.

A further market measure, distinct from the index, is the average sale price which across New Zealand also increased further to $387,567 in September from $385,426 in August.

“There are signs of more activity in the market with an increase in the number of sales and more listings in many areas. This increase in activity is normal for Spring but there is still a feeling that activity levels are below normal, with somewhat fewer listings to date this spring than was expected” said QV Valuation Manager Glenda Whitehead.

“There is strong competition among keen buyers in some localities and price brackets for the limited properties available. This competition is pushing up many sale prices, as previously unsuccessful bidders offer higher prices in an attempt to secure a property. With prices in some localities rising, this will likely encourage more sellers to put their properties on the market as their price expectations come closer to being met” said Whitehead.

“Compared to the same time last year there is now more market activity across most price bands, but especially towards the lower end of the market. However, there is no consistent national trend as to whether prices are going up or down within each value band, with each location reacting to local market influences and dynamics. The market is still clearly in a state of change”

The results of the latest quarterly QV.co.nz Housing Survey show that consumer confidence has improved, but a degree of uncertainty remains. The majority of respondents now expect prices to increase over the next year, a dramatic reversal of last quarter’s survey results. Fewer respondents listed job security and financial pressures as factors influencing whether they would buy or sell. The survey also showed that while the same number of people are considering buying or selling within the next year, a greater proportion are now considering selling within the next six months. Despite these positive results, comments from respondents reflect mixed opinions about the prospect for the overall economy in the medium term.

Increasing values in recent months mean that most of the main centres now have values above the same time last year. In the Auckland Area values are now 0.6 percent above last year, the Wellington Area is 1.1 percent up, Christchurch 0.4 percent up, and Dunedin 2.2 percent up. Tauranga is still 1.8 percent below last year but has improved rapidly over recent months. Hamilton is the only main centre to drop back slightly and is now 0.9 percent below last year.

Values in most of the provincial centres have not risen as much in recent months as the main centres. As a result most are still showing values below the same time last year. Whangarei is -4.2 percent compared to last year, Wanganui -2.5 percent, Nelson -0.5 percent and Invercargill -2.0 percent. New Plymouth at 2.9 percent and Palmerston North at 1.1 percent are exceptions, with both having values above the same time last year. In contrast to most of the rest of the country, continuing value declines in recent months have led to Rotorua (-3.7 percent), Gisborne (-9.0 percent) and Queenstown Lakes ( 6.3 percent) all still being below last year.

ENDS

Auckland

Property values in the Auckland region increased by 0.6% over the past year (calculated over the three months ending September 2009 in comparison to the same period last year), an improvement on the 1.5% annual decline reported in August. The average sale price for the region increased from $502,022 to $507,617.

Glenda Whitehead of QV Valuations said; “In the Auckland region, there doesn’t appear to have been a great shift in attitude over the past month. While there seems to be a few more listings appearing on the market, to date there has been no ‘spring- flush’. We have however noted a lack of consistency in activity and listings between geographical areas. For example, there is strong demand in the $600,000 to $1 million price bracket in Auckland City suburbs including Mt Eden, Remuera, and Ponsonby, with some intense bidding and short sale periods. On the other hand, in Waitakere there is strong demand in the $330,000 to 420,000 range, with the shortage of listings creating multi-offer situations and very quick sale periods. Similarly, on the North Shore, the low to middle end of the market seems to be the most popular, with buyers ranging from those wanting to down-size their mortgage, to those on the lookout for a bargain”.

“In these hotter parts of the market, it is felt that there is a general hyping-up of buyer expectations and consequently an increase in the speed that properties are turning over, with purchasers being driven to make quick decisions. Consequently, very healthy prices are being paid, which should provide extra incentive for some vendors to list in the near future. A limited number of investors now seem to be sizing up the market again, although reportedly they are buying strictly for sound cash-flow returns, or simply walking away” Glenda said.

“The wider picture is not all rosy, as listings in some price brackets are wallowing and have not experienced much in the way of a price rebound. While quality properties are doing better, those of poor presentation or needing significant maintenance work still struggle attract attention. However, general confidence in the residential market is the strongest we have seen for a couple of years” Ms Whitehead said.

Hamilton

Property values in Hamilton decreased by 0.9% over the past year (calculated over the three months ending September 2009 in comparison to the same period last year), down on the 0.1% annual growth reported in August. The average sale price for the city decreased from $339,298 to $344,971.

Mairi Macdonald of QV Valuations said; “After six consecutive months of residential property value growth, Hamilton City has stalled, and is actually showing a slight decline in property values during September. Two of the four areas of the city experienced year on year declines; 1.6% in Hamilton North East and 2.4% in the South West part of the city. Although prices have at least flattened out from the erosive start to the year, the average sales price continues to fluctuate and does not give a good indication of real value shifts”.

“This slight decline in property values could be due to the increasing number of properties coming on to the market as spring approaches. There are also an increasing number of new houses planned for building after a surge of section sales in Hamilton over the past couple of months. Seventy percent of sales in Hamilton during September were in the $200,000 to $400,000 price bracket, while 17.5% of sales were between $400,000 and $500,000” Ms Macdonald said.

Tauranga

Property values in Tauranga declined by 1.8% over the past year (calculated over the three months ending September 2009 in comparison to the same period last year), a substantial improvement on the 4.1% annual decline reported in August. The average sale price for the region decreased from $412,320 to $402,880.

Shayne Donovan-Grammer of QV Valuations said; “The residential property market in Tauranga is starting to show signs of stabilising after a turbulent twelve to eighteen months. Vacant land is starting to move again, although admittedly at fairly sharp prices. Land sales should in turn give a bit of relief to the construction industry. The low to middle price bracket is still where the bulk of the activity is in Tauranga, but there is more interest now in the higher brackets which we haven’t seen for quite some time”.

Wellington

Property values in the Wellington region increased by 1.1% over the past year (calculated over the three months ending September 2009 in comparison to the same period last year), an improvement on the 1.4% annual decline reported in August. The average sale price for the region increased from $431,614 to $436,633.

Kerry Buckeridge of QV Valuations said; “The fact that we are now experiencing year-on-year growth in Wellington is the strongest evidence yet that we have had a complete turn-around in the City’s residential property market from last year. Values have slowly but surely crept up over the last few months, with the typical spring flush yet to eventuate, and therefore yet to take buying pressure off existing housing stock. Subsequently the average number of days required to sell a property continues to fall. In short, this is a seller’s market. Buyers are often missing-out due to increased competition, and many investors are rethinking their buying strategies. The days of cheeky offers are gone for now”.

“Interestingly, we have started to note more movement of higher priced properties in the Wellington area. Such housing stock has been very slow to change hands for the past year, but activity in the million-plus bracket is starting to trickle through into sales. This may be a sign of the times, as confidence slowly returns to the country’s economy, and also may be a flow-on effect from activity in lower price brackets” said Mr. Buckeridge.

“It will be interesting to see where we go from here. Many market commentators would not have picked the five-month-long value recovery we are currently experiencing. It should be noted however that value increases are not vast, but have served to stabilise values from where they were headed. In Wellington we are also more subject to public sector restructuring which could, if it eventuates, have a negative impact on property values in the future” said Mr. Buckeridge.

Christchurch

Property values in Christchurch increased by 0.4% over the past year (calculated over the three months ending September 2009 in comparison to the same period last year), an improvement on the 1.9% annual decline reported in August. The average sale price for the city increased from $344,401 to $348,922.

Melanie Swallow of QV Valuations said; “Property values continued to show a slight recovery in the month of September, indicating a period of consolidation heading into the summer months. Suburban Christchurch has held well, with all suburbs showing value increases over the past year. However, these numbers still need to be treated with caution”.

“The market is still showing clear segmentation in Christchurch, with the level of activity strongest in the $350,000 and under part of the market, closely followed by the $350,000 to $500,000 price range. Local agents continue to report a shortage in listings which is putting buying pressure on properties currently for sale. The auction process appears to be providing strong results for sellers, and we are hearing of multi-offer situations. We believe that this continues to represent a small bubble in the market, and is probably a volume related issue for the short term” Mrs Swallow said.

“We expect to see values soften slightly if the spring and summer months bring more listings to the market. Overall, there has been an improvement in market sentiment, although buyer behaviour is still cautionary with job security and the ability to service debt being the key considerations at present. We are starting to see evidence of a more traditional spring and summer property market” Mrs Swallow said.

Dunedin

Property values in Dunedin increased by 2.2% over the past year (calculated over the three months ending September 2009 in comparison to the same period last year), a substantial improvement on the 0.4% annual growth reported in August. The average sale price in Dunedin increased from $254,619 to $258,103.

David Paterson, the QV spokesperson for Dunedin said; “For the second consecutive month we have seen positive annual growth in Dunedin’s residential property values. In terms of growth rate, Dunedin City is leading the other main centres. Our statistics show that Dunedin values have risen approximately 4.1% since the values bottomed out earlier this year. However, values are still 6.7% below the peak of the market in 2007. Our figures show the growth has been reasonably consistent across the city, however the Taieri area shows the greatest improvement from 2.7% annual decline in August, to 1.6% annual growth in September, a 4.3% turnaround.”

“The market is currently characterised by a shortage of listings, an oversupply of buyers and a shorter selling period. The increase in values we have seen recently is likely to be a direct result of these factors. The question yet to be answered is; at what point will the increase in values encourage property owners to consider selling? Time will tell whether an increase in listings will result in levelling values” Mr. Paterson said.

QV Residential Price Movement Report - as at September 2009 (XLS)

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