Nationwide property values resume gradual climb

Media release
10th May 2012
Nationwide property values resume gradual climb

Nationwide residential property values resumed their gentle rise in April according to the latest QV index. Values are up 0.4% over the past three months and 3.1% up over the past year. Values are now 2.9% below the previous market peak of late 2007.

QV Valuer Glenda Whitehead said “nationwide values have once again increased slightly in the past month, continuing the trend that has persisted for the past year. The marginal drop in values in March appears to have been a temporary blip. There continues to be variability across the country but slight increases in values in parts of Auckland, Wellington, Hamilton and several of the provincial centres are helping to push up nationwide values”.

Whitehead said “sales activity has been strong for the last few months, with volumes at the highest levels since 2007. Some of the increase in activity has been due an increase in confidence amongst home buyers, releasing some of the pent-up demand caused by several years of lower than usual sales activity. First home buyers are also active in most of the main centres, in part encouraged by the Welcome Home Loan package and low interest rates. Sales activity will slow down a little over winter but the increased confidence in the property market is likely to carry through into Spring”.

Auckland
Values in the wider Auckland area are up 0.6% over the past three months, and 5.0% up over the past year. Values in the old Auckland City are rising faster than any of the other main centres, at 6.8% over the past year to now be 5.1% higher than the previous market peak in 2007.

QV Valuer Glenda Whitehead said “property values are performing quite differently across what is a very large urban area. The financial position of buyers appears to be a key driver for whether prices in suburbs are rising or remaining more stable”.

“Properties in the inner leafy suburbs, including Old Auckland City, that command values in excess of $800,000, continue to be in strong demand. Buyer numbers are well in excess of the relatively low listing levels. This imbalance continues to see sale prices climb with buyers seemingly less financially restricted and keen to outbid each other, typically at auction or through pre-auction offers. Some of this activity is a counter-balance to a long period of inactivity which has caused pent up demand. Agents have also indicated buyer numbers are being bolstered by New Zealanders returning from overseas” said Whitehead.

“Values have also been rising in Te Atatu Peninsula, New Lynn and Titirangi. Demand has outstripped listing levels in recent months for properties in the $400,000 to $550,000 price bracket.

“In other suburbs there is a better balance of supply and demand with most buyers under stricter financial constraint. Areas where family homes can be purchased under $400,000 such as Papatoetoe, Glen Eden, Ranui and Massey are experiencing steady turnover with prices either firm or increasing marginally.

“Hillsborough, overlooking the Manukau harbour and One Tree Hill, continues to offer sizeable family homes on full sites for $500,000 to $600,000. Values in this area appear stable in recent months. Demand for these is coming from buyers who seek solid construction options that won’t present any maintenance issues in the future.

“Demand within suburbs on the North Shore is varied, with Hillcrest and Forest Hill remaining popular. Properties here priced in the $500,000 to $750,000 bracket are seeing strong demand and values are now slightly increasing. Sunnynook, with family homes in the $450,000 to $600,000 bracket, saw a big jump in values late last year but increases have now eased and values are steady this year” said Whitehead.

Hamilton
Values in Hamilton have risen 0.5% over the past three months following several months of relative stability. Values are now up 1.7% over the past year but remain 10.6% below the 2007 market peak.

“There has been renewed interest in the market from people who have been holding off for a few months. This has resulted in properties in the middle and upper low end of the market selling best. This renewed interest in the property market has reduced the stock of properties on the market in the city and this may lead to a shortage of properties if the demand continues. Mixed economic signals on the home front including increasing unemployment and a reduced dairy payout as well as a challenging global backdrop may mean that the market flattens over the winter months” said QV Valuer Richard Allen.

Tauranga
Tauranga values have been gradually trending down over the past few months, dropping 0.6% over the past three months, but still remaining 0.7% above the same time last year. Values are now 11.5% below the 2007 market peak.

“Lower end properties are receiving the most interest with first home buyers entering the market, as younger couples with smaller deposits have also been able to enter the market for the first time in years due to the Welcome Home Loans programme. The price floor for entry level properties is also now heading below $200,000 which is unheard of in Tauranga in the last four years. The remainder of the residential market is ticking over but really no more” said QV Valuer Paul Thomas.
Wellington
Over the past year values in the Wellington area first dropped then recovered. Values are up 0.6% over the past three months, and also up 0.6% over the past year.

“Although the Wellington market is active with good demand from buyers, value levels remain relatively steady. First home buyers are prominent and investors are starting to enter the market for multi-unit investment blocks. There is also an increase in activity in the rural lifestyle market. Some potential buyers are again commenting that it is difficult to find a suitable property, indicating that there is a shortage of listings in some areas. Well presented and located property in good school zones are still selling well, sometimes under multiple offer situations” said QV Valuer Pieter Geill.
Christchurch
Values in Christchurch had been rising steadily for most of the past year to now be 4.8% higher. However over the last couple of months values first flattened then dropped back slightly. It is too early to say if that represents a longer term slowing of values in Christchurch. Compared to the market peak of late 2007 values are now just 0.1% lower.

The areas neighbouring Christchurch continue to increase in value faster than anywhere else in the country. Waimakariri District has increased 13.0% over the past year and Selwyn District 9.5%. These increases have pushed values further above the previous market peak of 2007 than anywhere else, with Waimakariri 9.0% higher and Selwyn 7.2% higher.

“Activity and demand continue to flourish in unaffected areas of Christchurch and the surrounding areas. Properties selling via auction or ‘sale by negotiation over’ have been very effective as the competition is driving sale prices. Feedback from purchasers also reveals the first offer they put forward is generally their best price due to being tired of going through the process and missing out on properties. We are also seeing more evidence of people well underway with planning or building in new subdivisions”said QV Valuer Richard Kolff.
Dunedin
Dunedin values have dropped back 1% in the last three months after rising 4.5% in the five months prior to that. Values are now 2.7% above the same time last year and 5.1% below the 2007 market peak.

“Demand is highest for lower valued properties with good attendance at open homes and an apparent shortage of listing. Buyers in this lower bracket appear to be a good mix of first home buyers and investors, with more outside investment being identified due to perceived affordability in the south” said QV Valuer Tim Gibson.

Provincial centres
Over the past three months values have increased between 1% and 2.5% in Rotorua, Palmerston North, Queenstown Lakes and Invercargill. Gisborne has dropped nearly 3% in the past three months, and Napier by 1.5% while the other main provincial centres have stayed more or less steady.

Over the past year most provincial centres have stayed within a 2% band with the exceptions being Whangarei up 3.1% and Nelson up 2.7% while Wanganui has dropped 4.9% over the past year and Gisborne has dropped 4.0%.

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