Monday 9th July 2007
PROPERTY PRICES STILL STRONG
June statistics released by QV today report growth in national property values at 12.2% over the past year (calculated over the three months ending June 2007 in comparison to the same period last year). The growth rate increased from 11.1% reported in May. The average New Zealand sale price was $378,672 for this period.
“The feedback from the market is that there is a slowdown in activity with fewer buyers and listings in many areas. However, the prices buyers are paying still appear to be holding up. QV statistics continue to show solid growth in property values across the country” said QV spokesperson Blue Hancock. “Continued activity in the lower priced segment has contributed to the current strong market”.
“The market appears to be returning to the traditional pattern of slowdown over the winter months in contrast to last winter where the market boxed on regardless” said Mr Hancock. “Reports around the country are that sellers’ price expectations remain high, while buyers are exercising a degree of caution”.
All the main urban areas reported higher growth in property values compared to last month. Auckland City grew by 9.9%, up from 7.5%. Hamilton 13.3%, Wellington 14.5% and Christchurch 13.4% all experienced growth above the national average. Property values in Dunedin also increased at a very healthy rate of 11.4% over the past year.
The trends varied across the provincial cities. Strong performers were Invercargill 28.2% and Gisborne 20.7%, which reported higher growth rates compared to last month. Wanganui and Manawatu remained stable at 14.1% and 21.8% respectively. Growth eased slightly in Tauranga 6.6% and New Plymouth 11%.
Main Urban Areas Commentary:
Auckland:
Property values in the Auckland region grew by 11.2% over the past year (calculated over the three months ending June 2007 in comparison to the same period last year), up from 9.5% reported last month. The average sale price for the region was $492,857.
QV statistics for the Auckland region continue to show increases in annual growth compared to last month in all Districts and Cities, apart from Papakura and Franklin. Year on year growth rates increased to 12.7% in Rodney, North Shore 12.6%, Waitakere 11.6%, Auckland City 9.9%, and Manukau 12.6%. Papakura and Franklin eased to 10.6% and 9.8% respectively.
“Good activity levels continue in the more affordable or first home buyer areas, and also at the discretionary end of the market, where perhaps decisions are less bound by borrowed finances” said Glenda Whitehead of QV Valuations.
“However, over the past month, our valuers have been noting a change in market attitude. There has been varied market feedback throughout the region including fewer listings reported by agents, caution surrounding investment, and investors knowingly purchasing with the expectation of lower yields on residential properties. There seems to be a growing gap between vendors’ expectations and purchasers’ willingness to pay. There is a general feeling that people are holding back a little, both home buyers and investors” said Whitehead. “At this early stage it’s more a feel than a fact. Spring will be the telling point on whether or not this “feel” is just the winter chills or a more substantial shift in the residential property market.”
Hamilton:
Hamilton’s property values increased by 13.3% over the past year (calculated over the three months ending June 2007 in comparison to the same period last year). The average sale price for the city was $354,461.
“Demand for residential property in Hamilton seemed to grow in June with property values increasing at a higher level than reported last month (from 11.8% last month to 13.3% this month)” said Richard Allen of QV Valuations. “Across the city, North East Hamilton experienced the strongest annual growth of 14.1%. Other areas recorded slightly lower growth, but still at very healthy rates with South East 12.1%, Central/North West 12.4% and South West 13.2%”.
“The residential property market continues to remain resilient. Expectations in the market are that sales activity will level off as we enter winter and that recent interest rate increases will have some impact on the property market” said Mr Allen.
Tauranga:
Tauranga property values grew 6.6% (calculated over the three months ending June 2007 in comparison to the same period last year). The growth rate is similar to that reported last month (6.7%).
“The Tauranga property market is presently stable with values growing at consistent rates over the past couple of months” said Christopher Boyd of QV Valuations. “There was an improvement in the average sale price from $417,124 last month to $419,556 this month”
“Recent anecdotal evidence suggests that sales volumes and inquiry has dropped off significantly and the market is beginning to slow. Smaller peripheral markets to Tauranga such as the Omokoroa Peninsula have been quiet for a while with vendors having to lower their expectations to achieve a sale” said Mr Boyd.
Wellington:
Property values in the Wellington region increased by 15.8% over the past year (calculated over the three months ending June 2007 in comparison to the same period last year). The average sale price for the region was $422,568.
“The property market in the Wellington region continues to strengthen. Hutt City is leading the market with 18.5% growth in property values, followed closely by Upper Hutt at 17.9%” said Max Meyers of QV Valuations.
“Wellington City has property values growing at 14.5%, up from 13.3% last month. Even the slowest growth seen in the central/southern part of the city is still very high at 13.4% with an average price of $501,776. Apartments are a large part of this market and price increases have been relatively low in the past because of the availability of new buildings. However, the escalating cost of new apartment buildings is now beginning to have an effect” said Mr Meyers.
“Overall, winter conditions have affected the number of sales in a typical seasonal pattern, but property is still selling very quickly, and prices are still at a very high level” said Mr Meyers.
Christchurch:
The Christchurch market continued to strengthen with residential property values growing at 13.4% (calculated over the three months ending June 2007 in comparison to the same period last year). The growth rate increased from 12.4% reported in May.
“There were some signs of hesitation in the market in early June after the increase in the official cash rate and the possibility of tax advantages for property investment being removed. However, QV statistics indicate that the market is still very strong, driven mainly by the lower priced housing segment and investors’ confidence. Many investors are of the opinion that the removal of tax advantages is unlikely to occur” said Mr Mark Dow of QV Valuations.
“In Christchurch City, the eastern 15.5% and south western suburbs 14.6% have scored the highest increases in growth rates compared to last month while the Hills 14.1%, Central City and North 11.5% were quite stable” said Mr Dow. “However, there are some signs of a slowing market with sales volume reducing in some provincial areas. We have also noted a number of homes struggling to be built for less than their completed market value due to increasing land prices and the costs of construction.”
Dunedin:
Dunedin’s residential property values increased by 11.4% over the past year (calculated over the three months ending June 2007 in comparison to the same period last year), up from 8.7 % last month. The average sale price in Dunedin was $268,719 up slightly on the previous month of $265,097.
“Despite predictions of a softening in the market and pressure from higher interest rates, residential property values have continued the upwards trend of the last few months. Growth has been reasonably consistent across the city, with most areas showing slightly higher growth rates compared to last month. The central and northern parts of the city record the highest growth at 13.8%” said David Paterson of QV Valuations.
“Agents are noting good demand for most property types and those that are realistically priced are selling quickly. There are reports that the higher price market is also becoming more active with a number of $1 million plus sales in the pipeline.”
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