Thursday 13th January 2011
2010 Residential Property Market update and review
The QV price indices for December show that New Zealand residential property values have continued to gradually decline. Values are now 0.9 percent below the same time last year, and 5.8 percent below the market peak of late 2007.
Looking back over 2010, values across New Zealand increased in the first few months of the year continuing the trend from mid 2009. From April 2010 onwards, values in most cities and regions began to gradually decrease again and by the end of December had dropped 1.9 percent compared to March. The rate of decline slowed towards the end of the year, suggesting that values may be beginning to stabilise in some areas.
Significant differences were evident between the main urban, provincial and rural areas throughout 2010.
Values of residential properties across all rural areas stayed relatively flat through until May before steadily dropping for the rest of the year. By the end the year values were 2.5 percent below the same time last year.
Across all provincial areas values rose through until March before falling until June, stabilising for a few months, then dropping steadily in the last three months of the year. Values ended the year 2.3 percent below the same time last year.
Across all the main urban areas values rose through until April before starting to decline. This rate of decline slowed towards the end of the year, and values ended the year 1.1 percent below the same time last year.
There were also differences between the Auckland and Wellington areas throughout the year.
In the Auckland region values increased by over 1.5 percent between January and March then slid back until July. The decline slowed through the second half of the year with the last few months being relatively stable. Values in the Auckland area ended the year 0.6 percent above the same time last year.
Within the Wellington region values increased by just over 1.0 percent through until April before rapidly dropping away until October when they flattened, then rose slightly from November to December. Values ended the year 2.2 percent below the same time last year.
Jonno Ingerson, Research Director for QV.co.nz said “low sales volumes were the most notable feature of the residential property market throughout 2010”.
“The year started with sales numbers similar to 2009, but from March 2010 onwards they began to drop. Between June and September volumes were at the same level as 2008 during the recession, 28 percent below 2009, 27 percent below the long term average, and 57 percent below the peak of 2003” said Mr Ingerson.
“The number of sales in October 2010 dropped to the lowest level for that month since 1985, and while there was a very mild recovery in November, it was still well below average. Early indications are that the number of sales will also be low in December. If that is the case then the total number of sales for the year will be about the same as 2008 and the lowest since 1991” said Mr Ingerson.
Mr Ingerson said “there were a number of factors that contributed to low sales volumes in 2010. There was a general lack of consumer confidence, and many would-be buyers and sellers were under financial pressure and were choosing to reduce debt rather than buy or sell property. Many sellers were unwilling to realise potential losses while values were falling so were content to stay put for the time being, with some improving their existing property rather than moving. They were also recognising the real costs involved in buying and selling. Sellers were often only prepared to buy after they had sold, so this also contributed to a slowdown in turnover ”.
“Securing finance was also an issue for many as the banks tightened their lending criteria. These criteria relaxed a little late in the year which probably contributed to the increase of sales in November” said Mr Ingerson.
“Many property buying and selling decisions were deferred early in 2010, when the Government indicated that it was likely to introduce a range of tax changes, including a decrease in income tax and change to the treatment of tax for investment properties. While the changes to tax on investment properties announced in the May budget were not as drastic as some expected, the investment sector of the market in particular remained very quiet” said Mr Ingerson.
Mr Ingerson said “As is always the case, general statements don’t apply to all parts of the market. Throughout the year, the market for high quality, well presented, mid-range properties in good areas remained strong with plenty of demand and good prices being achieved. At the other end of the scale, poorly presented properties, or those with undesirable features in the eyes of buyers were either not selling, or were selling for lower prices. Mortgagee sales continued to impact values in some pockets of the market”.
“Without significant changes in the wider economy, indications at this stage are that there are unlikely to be any dramatic changes in the property market during 2011. Consumer confidence is a key driver of the property market, and that will need to improve before the market returns to some form of normality” said Mr Ingerson.
Mr Ingerson said “the latest survey carried out by QV.co.nz suggests that some of this consumer confidence may be returning. There are now more people who think that house prices will rise in 2011 than those who believe they will fall”.
“Despite the majority of people believing that now is a good time to buy but a bad time to sell, there are now more people intending to buy and more intending to sell in the next twelve months than was the case in June 2010” said Mr Ingerson.
“There are signs that the oversupply of property for sale may continue for the first half of this year as there are more people intending to sell in the next six months than there are intending to buy” said Mr Ingerson. Full results of the survey are available on the QV website.
Mr Ingerson said “At some stage in the next year or two, the lack of building activity over the last couple of years, combined with a steadily increasing population is likely to lead to increased demand for housing and therefore a stabilisation and subsequent increase in values. This will mostly be seen first in the main centres, while some of the provincial and rural areas will continue to struggle as economic conditions remain difficult for both businesses and consumers”.
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 Auckland Region |
| 0.6% |
| $549,803 |
| Hamilton |
| -2.7% |
| $352,370 |
| New Plymouth |
| -1.4% |
| $324,811 |
| Palmerston Nth |
| -2.3% |
| $290,471 |
| Christchurch |
| N/A |
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| Queenstown |
| -4.3% |
| $536,087 |
| Invercargill |
| -2.8% |
| $213,366 | |
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| Whangarei |
| -4.9% |
| $320,925 |
| Tauranga |
| -2.5% |
| $406,482 |
| Rotorua |
| -0.8% |
| $277,550 |
| Napier |
| 0.1% |
| $331,350 |
| Hastings |
| -1.2% |
| $298,849 |
| Wellington Rgn |
| -2.2% |
| $470,857 |
| Nelson |
| 2.0% |
| $370,205 |
| Dunedin |
| -3.3% |
| $268,968 |
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| New Zealand |
| -0.9% |
| $410,058 | |
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