QV - National property values continue to rise 12 Oct 2011

Wednesday, 12 October 2011

National property values continue to rise

National property values have continued to gradually rise according to the QV residential property index for September.

“Nationwide property values have been gradually increasing for the past six months and are now 0.7 percent above the same time last year and 4.6 percent below the market peak of 2007” said Jonno Ingerson, Research Director QV.co.nz.

“Much of the nationwide increase over the past few months can be attributed to Auckland and to a lesser extent Christchurch. Values across the rest of the country have varied” said Ingerson.

“Values in the Auckland area have increased 3.7 percent since January, and are now 3.4 percent above the same time last year. As a result of these recent increases, values are now 0.6 percent above the previous market peak of late 2007” said Ingerson.

“The old Auckland City continues to have the fastest increasing values within the Super City having increased 5.4 percent since January, and 4.6 percent over the past year. Values are now 2.6 percent higher than the 2007 market peak. North Shore has increased 3.0 percent over the past year, Waitakere 2.3 and Manukau 1.9 percent” said Ingerson.

“There are also signs that the market may be turning in other areas also. Values in Hamilton edged up very slightly over the past month after being flat for several months and are now only 1.2 percent below last year. In Tauranga values have been gradually rising for several months now and as a result values are only 0.1 percent below last year. Both Hamilton and Tauranga are still nearly 12 percent below the market peak” said Ingerson.

“Dunedin continues to be volatile but rises in the last month mean that values are now only 2.0 percent below last year. In contrast to Hamilton and Tauranga a strong recovery in values in Dunedin during 2009 means that current values are only 7.1 percent below the peak despite falling gradually for most of this year” said Ingerson.

Ingerson said “values in the Wellington area had been declining since January, but appear to have levelled off in the last couple of months and as a result are now only 1.1 percent below the same time last year. Wellington remains 7.6 percent below the 2007 market peak.”

“In Christchurch values continue to steadily increase, particularly in the Northern and Western suburbs. As a result of values increasing since January, they are now 2.1 percent above the same time last year. The areas surrounding Christchurch have also continued to increase in value for several months and as a result Selwyn is 5.3 percent above the same time last year, and Waimakariri 2.8 percent up” said Ingerson.

Ingerson said “despite a slight seasonal increase in listings in many areas, there has been little increase in sales activity over the past few months. Many buyers and sellers remain cautious, and the developing European economic crisis has begun to affect business and consumer confidence.”

While unrelated to the QV index, and a less reliable measure of value change, the average New Zealand sales price over the last three months is $402,150.

There is considerable variability across the provincial centres. Whangarei, Rotorua, Gisborne and Invercargill have all risen in value over the past three months but are down compared to last year by -3.7 percent in Whangarei, -1.9 in Rotorua, -1.0 in Gisborne and -2.8 percent in Invercargill. Hastings (-2.1 percent compared to last year), Napier (-1.2), New Plymouth (-3.5) and Wanganui ( 7.8) have all fallen further below last year after decreasing in value over the past three months. Palmerston North, Nelson and Queenstown Lakes have all increased in value slightly over the past three months and are above last year by 0.1 percent in Palmerston North, 1.3 in Nelson and 0.8 in Queenstown Lakes.

Main Urban Areas Commentary

Auckland

QV’s Residential Price Index for September shows that property values in the Auckland region are 3.4% higher than the same time last year. Values are continuing to increase.

Ms Glenda Whitehead of QV Valuation said; “Values in the Auckland Region have continued to grow in the residential housing market. All areas are at a higher level compared to a year ago. As reported in previous months, former Auckland City continues to lead the movement. We are also seeing favorable movements in the North Shore and parts of Manukau, for vendors at least.”

“While spring listing levels also appear to be increasing, supply and demand are yet to be in equilibrium for many areas” said Ms Whitehead.

“Focusing across the region, the Auckland Central area, which includes Pt Chevalier, Grey Lynn, Ponsonby, Herne Bay, the CBD and Parnell have seen the largest upward shift, some 6% year-on-year. Within this area our valuers have seen many properties going to auction, with some achieving values well above expectation. Another trend, is that a number of properties do not make it to auction day, instead selling prior, under multi-offer situations” Ms Whitehead said.

Ms Whitehead said “The area from Avondale, through Mt Albert, Mt Eden and across to Onehunga has also seen a 4.2% increase in values over the past year.”

“The North Shore has been another area that has performed well. The suburbs from Devonport and going north along the coast up to Torbay are up 3.2%, as well as those in and around the Albany basin, which have increased by 3.9%. Quality built homes and those with good access to motorways and the commercial areas appear to be in most demand” Ms Whitehead said.

Within Manukau, the best performing area includes Bucklands Beach, Pakuranga, Howick and going south to Meadowlands, which are up 3.8%. While quality properties in these areas sell quickly and at healthy levels, the area has many properties on the market that don’t meet buyer expectations. This is due to quality of presentation or they are built of less desirable building materials. Values in Manurewa, Weymouth and across to Wattle Downs are marginally above levels a year ago, at 1.1%. Our valuers confirm that whilst activity is increasing, value movements seem marginal” Ms Whitehead said.

QV’s Residential Price Index is calculated using sales data from the 3 months leading up to the month being reported. It is not the same as the average sales price, which fluctuates in line with the mix of properties selling in upper or lower price brackets. The average sales price for the Auckland region in September was $529,028.

Hamilton

QV’s Residential Price Index for September shows that property values in Hamilton are 1.2% lower than the same time last year. Values continue to be flat.

Mr. Richard Allen of QV Valuations said: “Values in Hamilton City have moved in a positive direction especially in comparison to the first half of the year. They are currently 1.2% lower than last year.”

“There was positive growth in all areas other than the North East. Despite property values growing in the rest of the city this month, the average sale price decreased slightly. Evidence suggests this is due to a lot of the sales in the city being in the lower to mid price range. Whilst the market has been subdued in Hamilton over the past couple of months, there are suggestions that demand is increasing” Mr. Allen said.

Tauranga

QV’s Residential Price Index for September shows that property values in Tauranga are 0.1% lower than the same time last year. Values have increased slightly.

Mr. Shayne Donovan-Grammer of QV Valuations said; “The residential property market in the region has remained stagnant. Investors haven’t played an active role in the market for quite some time.”

“The majority of investors in Tauranga buy primarily for capital gains rather than the rate of the return. With little prospect of capital gain in the immediate future investors are staying on the sidelines. Some investors are leaving the market as they see no sense in topping up their rentals while values continue to level out” said Mr Donovan-Grammer.

Mr Donovan-Grammer said “With low interest rates and a good number of serious sellers this market favours the first home buyers who are prepared to do their research. We suggest that the buyer look at a lot of properties to gauge value, choose a location that is improving or has a proven track record as well as get sound, independent advice.”

Wellington

QV’s Residential Price Index for September shows that property values in the Wellington region are 2.0% lower than the same time last year. Values are looking to flatten. Mr Kerry Buckeridge of QV Valuations said; “The last 2-3 months have seen the Wellington market levelling off. For the moment property prices appear to be steady after a sustained period of decline in both price and sales.”

“There is a good level of affordability due to the reasonable prices and low interest rates. This is resulting in a lot of activity, primarily by first home buyers. In my work I have seen a number of young Wellington City based professionals making the choice to purchase in the more modestly priced Hutt Valley” Mr Buckeridge said. “In the middle segments of the market, purchasers continue to be quite cautious. The negotiation skills of agents are paramount in order to finalise a sale. It is important for properties to be well presented, problem free and sensibly priced” Mr Buckeridge said.

Mr Buckeridge said “Over the last few months, we have also seen a number of good $1million plus sales.”

“There appears to be quite limited activity from residential investment buyers. Rental yield continues to be of prime importance as buyers no longer rely on capital gain occurring” Mr Buckeridge said.

Christchurch

QV’s Residential Price Index for September shows that property values in Christchurch are 2.1% higher than the same time last year. Values continue to increase, driven by activity in the unaffected districts.

Mr. Brendon Bodger of QV Valuations said; “Demand continues for property throughout the wider Christchurch area. However, as expected it is stronger in the relatively undamaged suburbs, particularly in the South West to North West.”

“A strong demand has continued for property and vacant sections in the wider Canterbury area, namely within the Selwyn and Waimakariri districts. We are also aware of demand for Eastern suburb properties by people who want to remain in the area” Mr Bodger said.

Mr Bodger said; “The number of property listings hasn’t increased significantly this month, as we would have expected with spring arriving. Real Estate agents are still reporting multi offer situations, particularly at the entry level end of the market. Higher valued properties are also attracting interest, however these properties are taking longer to sell.”

“I think that it is also important to remember that we are looking at the market in the context of low sales volumes at the moment, especially when compared to the volumes at the peak of the market” Mr. Bodger said.

Dunedin

QV’s Residential Price Index for September shows that property values in Dunedin are 2.0% lower than the same time last year. Values continue to be volatile in a narrow band.

Mr. Tim Gibson of QV Valuations said; “The Dunedin residential property is starting to see an increase in activity and improved values. Traditionally this occurs over the spring period.”

“There appears to be improved demand for houses in the lower valued bracket. This is resulting in a decrease in selling times and some growth in values after a sustained period of stagnant growth. The higher demand appears to be both a mixture of first home buyers and investment purchasers. The higher proportion of sales occurring within the lower valued property has also caused the average sales price to decrease over the past month” said Mr Gibson.

Mr Gibson said; “It is too soon to say that the market is in a period of sustained growth, as some uncertainty still remains. This is evident with the patchy demand in relation to higher valued dwellings.”

“Overall the market is still 7.1% below the market peak of July 2007” Mr. Gibson said.

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