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Monday 14th May 2007

Property Growth Returns to Double Digits

QV’s April statistics report growth in national property values at 10.6% over the past year (calculated over the three months ending April 2007 in comparison to the same period last year). The growth rate increased from 9.8% reported in March. Over this period, the average sale price for New Zealand properties was $366,032.

“The growth in national property values has returned to levels above 10%. The last time QV reported this high level was in September 2006 when property values increased by 10.4% annually” said QV spokesperson Blue Hancock. “The market has continued unabated over the last month on the back of stronger than anticipated migration and high levels of employment creating steady demand, especially in the lower end of the market.”

“With the higher interest rates and the onset of the winter season, we can expect the market to slow over the coming weeks” said Mr Hancock.

The robust property market has seen property values continue to strengthen in the main urban centres. The most noticeable increases in property values were reported in Hamilton 11.4%, Wellington City 13.4% and Christchurch 11.8% where growth was recorded at double-digit levels. Auckland City 6.6% and Dunedin 7.6% experienced increases in annual growth compared to last month.

In many provincial cities, growth in property values continued to increase above 10%. Strong performers included Hutt City 17.7%, Gisborne 16.9%, Upper Hutt 15.4% and Porirua 14.9%. Palmerston North, Wanganui and New Plymouth also grew at very healthy rates of 14.5%, 13.9% and 10.8% respectively.



Main Urban Areas Commentary:

Auckland:
Property values in the Auckland region grew 8.2% over the past year (calculated over the three months ending April 2007 in comparison to the same period last year), up from 7.5% reported last month. The average sale price for the region was $470,798.

“Annual growth rates for the Auckland region were up from last month, with the exception of Manukau and Papakura, which both eased to 10.1% but still ahead of the growth reported in January.  Increases in Auckland City property values were 6.6% for the year, up from a low of 4.5% reported in January 2007. Activity in Auckland City was very positive, with strong demand in the areas of Mt Wellington, Ellerslie, Pt England and Glen Innes, together with the eastern bays areas” said Glenda Whitehead of QV Valuations. “The balance of districts and cities from Rodney through to Franklin showed growth rates in the 9%-12% range. Overall, we are seeing steady and positive market conditions in the region.”
 
“Our valuers continue to report good demand from buyers, reflected in a very active residential market within the low to mid-priced range.  Demand in the west of Auckland continues to come from both owner-occupiers and investors.  There is still good demand from buyers looking for homes to renovate or properties to subdivide” said Whitehead. “Activity in investor areas like Otara, Manurewa and Mangere has slowed down while the market in the $400-$600k range appears to be strong, especially in Dannemora.”
 
Hamilton:
Hamilton’s property values grew by 11.4% (calculated over the three months ending April 2007 in comparison to the same period last year), down from 12.2% reported last month.

“Demand for property across Hamilton appears to be slowing with annual growth easing in all parts of the city. The largest decrease in growth rates was reported in South East Hamilton which dropped from 11.2% last month to 10% this month. North East Hamilton 11.6%, Central City/North West Hamilton 11.5% and South West Hamilton 10.2% experienced smaller decreases in annual growth compared to last month” said Richard Allen of QV Valuations.

“Although the rate of increase in property values is easing, the average sale price in Hamilton still increased from $338,226 to $341,778. Expectations are that sales activity will level off as we enter winter and sale prices will remain relatively static” said Mr Allen.

Tauranga:
Property values in Tauranga increased by 5% (calculated over the three months ending April 2007 in comparison to the same period last year), up from 2.4% reported last month. The average sale price for the city was $417,116.

“Annual growth in property values has effectively doubled over the past month. Anecdotal evidence suggests that there has been a surge in activity over the last 6-8 weeks” said Shayne Donovan-Grammer of QV Valuations. “Increased activity is due primarily to sales of lower to mid valued homes, with first home buyers being a definite driver.”

“Apartments continue to perform poorly with some re-sale levels lower than prices paid prior to the development commencing. There is restricted interest in higher valued homes” said Shayne Donovan-Grammer of QV Valuations.

Wellington:
Property values in the Wellington region grew by 14.7% (calculated over the three months ending April 2007 in comparison to the same period last year). The average sale price for the region was $422,779.

“Wellington property values are increasing at even higher levels” said Max Meyers of QV Valuations. “The annual growth of 14.7% reported this month was the highest rate since QV started reporting monthly changes in the property market in February 2005. Over the same period, the rate was 13.7% in 2006 and 10.4% in 2005. The last time QV recorded annual growth above 14% across the Wellington region was in January and February last year”.
 
"The highest increases are occurring in Hutt City 17.7%, followed by a resurgent Kapiti Coast 16.1% and Upper Hutt 15.4%" said Mr Meyers.
 
Christchurch:
Property values in Christchurch City increased by 11.8% over the past year (calculated over the three months ending April 2007 in comparison to the same period last year), up from 10.7% reported last month. The city’s average sale price was $348,892.

“QV’s market statistics show an annual increase in property values for Christchurch from 10.7% last month to 11.8% this month. However, the average sale price for the city fell slightly from $352,755 to $348,892, which could indicate increased activity in the lower price brackets compared to higher price brackets.  This was reinforced by QV's price range statistics, which shows the highest proportion of sales to be within the $200,000-$300,000 bracket” said Mark Dow of QV Valuations.
 
“The provincial parts of Canterbury and Westland demonstrate mixed trends with Hurunui, Banks Peninsula, Ashburton, MacKenzie, Waimate, Westland and Grey all recording lower annual increases than the previous month.  Buller, Waimakariri, Selwyn and Timaru recorded modest improvements” said Mr Dow.
 
“The current feeling is that the market is in a holding pattern.  The latest interest rate increases are starting to be felt by the market. We would not be surprised if there was a slowing of the market, especially in the lower price brackets where mortgage affordability is a key consideration” said Mr Dow.

Dunedin:
Dunedin residential property values increased by 7.6% (calculated over the three months ending April 2007 in comparison to the same period last year), up from 7.3% last month. The average sale price in Dunedin was $262,337.
 
"Dunedin continues to see positive increases in property values with most areas showing slightly higher growth rates compared to last month. The southern part of the city recorded the highest growth of 10.4% whilst other parts are experiencing growth rates within the 6%-7% range” said Ian Harvey of QV Valuations.
 
“Sales activity remained positive with good buyer interest, especially for the lower to medium priced properties” said Mr Harvey.

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