Monday 7 December 2009
Property value growth driven by main centres
Property values are continuing to increase according to the QV residential property indices for November released today. Nationally, values are now 1.0 percent above the same time last year, up from the 0.2 percent reported last month.
According to the index, nationwide values are now 4.1 percent up from their low in April 2009, but are still 5.9 percent below the market peak of late 2007. This increase in nationwide values is largely driven by the main urban areas which have risen 4.7 percent since the low. In contrast the provincial centres have only risen 2.0 percent and rural residential areas only 0.4 percent.
A further market measure, distinct from the index, is the average sale price which across New Zealand also increased to $393,373 in November from $389,198 in October. This figure tends to reflect the mix of properties sold during the period rather than absolute value shifts.
“The level of market activity has remained relatively static for most of 2009 and the usual pick up in activity over spring failed to materialise. While turn-over activity, measured by number of days taken to sell a property, is improving in the main centres, total activity levels continue to be low. This is driven by the shortage of listings as prospective vendors decided to stay put rather than sell. This situation differs in the regions where listings are more abundant, but actual turn-over is slower” said QV Valuation Manager Glenda Whitehead.
“There are signs in recent weeks that there are more properties coming on to the market, especially in the main centres. This increase in supply will help to ease some of the upward pressure on prices presently caused by motivated buyers competing vigorously for the few available properties.” said Whitehead.
“Building consents for new houses have also continued to increase in response to improving market confidence, but it will take some time before these homes are on stream. This building activity follows on from an increasing number of section sales this year, after a very stagnant period in 2008. Net migration is continuing to increase, driven particularly by fewer departures. This places pressure on the housing market and is contributing to rising property prices. In contrast the rental market does not appear to be under pressure with rental levels relatively static” said Whitehead.
“Indications are that some people have been watching the market and have decided that now is the time to buy and sell. We expect that January and February will lead to further increases in activity and lead to more balanced market conditions” said Whitehead.
Values in most of the main centres have continued to increase in recent months. In the Auckland Region values are now 3.1 percent above last year, the Wellington Area is 2.9 percent up, Christchurch 2.8 percent up, and Dunedin 4.1 percent up. In Hamilton and Tauranga values have remained relatively static in recent months and as a result remain below last year’s levels at -0.5 percent and -2.2 percent respectively.
Values in many of the provincial centres have also risen over recent months. As a result values are above last year in Napier (0.2 percent), New Plymouth (6.6), Palmerston North (2.3), Nelson (1.1) and Invercargill (0.4). Despite recent rises some areas are still below last year with Gisborne at -4.8 percent, Hastings -0.4, Wanganui 2.2 and Queenstown Lakes at -6.1 percent. In contrast values have slid back in recent months in Whangarei (to -6.2 percent) and Rotorua (to 1.8 percent).
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 Auckland Region |
| 3.1% |
| $519,051 |
| Hamilton |
| -0.5% |
| $343,562 |
| New Plymouth |
| 6.6% |
| $331,692 |
| Palmerston Nth |
| 2.3% |
| $287,383 |
| Christchurch |
| 2.8% |
| $357,801 |
| Queenstown |
| -6.1% |
| $548,168 |
| Invercargill |
| 0.4% |
| $213,282 | |
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| Whangarei |
| -6.2% |
| $315,186 |
| Tauranga |
| -2.2% |
| $401,620 |
| Rotorua |
| -1.8% |
| $260,557 |
| Napier |
| 0.2% |
| $313,283 |
| Hastings |
| -0.4% |
| $300,109 |
| Wellington Rgn |
| 2.9% |
| $438,148 |
| Nelson |
| 1.1% |
| $356,827 |
| Dunedin |
| 4.1% |
| $271,460 |
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| New Zealand |
| 1.0% |
| $393,373 | |
Annual Property Value Change
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Main Urban Areas Commentary
Auckland
Property values in the Auckland region increased by 3.1% over the past year (calculated over the three months ending November 2009 in comparison to the same period last year), an improvement on the 2.5% annual growth reported in October. The average sale price for the region increased from $506,642 to $519,051.
Glenda Whitehead of QV Valuations said; “Generally speaking, residential property in the Auckland region continued to perform strongly over November. A continued shortage of listings and pent up demand in some areas has increased buyer competition, pushing up prices in the process. This activity appears prevalent in the central hubs within the region, with some contrasting activity out towards city fringes. An example of this is within Waitakere City, where demand is strong in Henderson and New Lynn, but weaker in Ranui and parts of Massey. Buyers continue to be discerning, focusing on properties with quality construction in traditionally sought-after streets and locations.
“Investors are also back and active in Waitakere, and appear to be accepting recent value shifts. Sold signs are a common site with properties generally turning over relatively quickly if correctly priced. However, buyers and banks continue to take the due diligence process very seriously, with finance continuing to be the lynch-pin in the success of many deals” Ms. Whitehead said.
“Within Auckland City itself, vendors who offer modernised, family-friendly and character homes are often pleasantly surprised with the sale prices achieved. This has been especially true in suburbs such as Ponsonby, Grey Lynn, Mt Eden, Sandringham, Epsom and One Tree Hill, where competitive auctions have produced this result. However, when returning to market in order to re-purchase, these vendors are also faced with stiff buyer competition” Ms. Whitehead said.
“On the North Shore, our valuers note great interest in newly-listed properties, with more groups attending open homes. Where genuine interest exists in a property, buyers are quick to put pen to paper and complete their due diligence smartly. This interest is manifesting itself as a gradual improvement in values, especially in the frequently sort-after beach front areas and suburbs such as Takapuna. But again, value adjustments are less evident in the inland suburban areas and mortgagee sales are still a component of the market. Within the very high-end of the market, say $3 million plus, values appear to be significantly less than 2006 to 2007 levels, although more sales appear to be occurring than this time last year” Ms. Whitehead said.
Hamilton
Property values in Hamilton decreased by 0.5% over the past year (calculated over the three months ending November 2009 in comparison to the same period last year), down slightly more on the 0.1% annual decline reported in October. The average sale price for the city increased slightly from $342,853 to $343,562.
Mr. Richard Allen of QV Valuations said; “Residential property values in Hamilton City slipped backwards a little in November after a slight recovery in October, further evidence that the market in the city has almost completely flattened off”.
“During November, value changes were not constant across the City. The largest improvement was in Hamilton North East and the Central City/North West Hamilton area. The South East and South West both decreased” Mr. Allen said.
“Over the last four months property values in the city have fluctuated within a very narrow range, which confirms our opinion that house prices in the city have flattened out for the time being. This is also supported by the fairly constant average sale price trend for the last two months. The market has seemingly absorbed a number of potential set backs which appeared likely because of poor regional economic factors, but it now appears that we are headed towards a sustained period of stability.” Mr. Allen said.
Tauranga
Property values in Tauranga declined by 2.2% over the past year (calculated over the three months ending November 2009 in comparison to the same period last year), down further on the 1.4% annual decline reported in October. The average sale price for the region increased slightly from $400,367 to $401,620.
Shayne Donovan-Grammer of QV Valuations said; “Tauranga appears to be lagging behind the value increases being felt by the main centres. Most of the sales that are occurring seem to be at either sharp or predictable prices, although there is strong interest shown by buyers for property in the $300,000 to $400,000 bracket. Predicted interest rate increases seem to have deterred investors more than first home buyers from participating in the market at this stage”.
Wellington
Property values in the Wellington region increased by 2.9% over the past year (calculated over the three months ending November 2009 in comparison to the same period last year), a substantial improvement on the 1.6% annual growth reported in October. The average sale price for the region remained relatively stable at $438,148.
Mr. Kerry Buckeridge of QV Valuations said: “As far as values go, the Wellington region is holding a fairly steady trend of increasing values, along with most of the country’s main centres. Well presented homes in traditionally strong locations are still attracting good offers, and there seems to be a decent amount of activity in higher price brackets”.
“It is possible however that we are starting to see the beginnings of a change. In the last couple of weeks we have heard reports that an increased number of properties are coming to market. This could be the start of a very late spring resurgence, which until now has not existed in any shape or form. The upward pressure placed on values in recent months by the well-documented shortage of listings just may be enticing sellers back into the market. It is expected that any significant increase in listings will help to bring balance to the market, and ultimately soften the upward value trend” Mr. Buckeridge said.
“Also worth mentioning is the popularity of renovations amongst home owners at present. We are getting a significant amount of work from would-be buyers who struggled to find what they were looking for in Wellington’s under-stocked property market. These people have decided to stay put for the time being, and spend money altering their existing property to meet their needs. Some of the renovations we are seeing are fairly substantial too, sometimes hundreds-of-thousands of dollars” said Mr. Buckeridge.
Christchurch
Property values in Christchurch increased by 2.8% over the past year (calculated over the three months ending November 2009 in comparison to the same period last year), a substantial improvement on the 1.3% annual growth reported in October. The average sale price for the city increased from $352,962 to $357,801.
Melanie Swallow of QV Valuations said; “Our figures this month continue to show a recovery in Christchurch’s property market. Suburban Christchurch has held well with the Hill suburbs showing the greatest recovery of 2.3 per cent in comparison to the same period last year, closely followed by the central and northern suburbs at 1.8 per cent. Although these results are encouraging, they should be treated with caution as there are still signs of a segmented market”.
“In the entry level part of the market, many properties are still achieving strong results at auction, and in some cases properties are still selling above what we would consider market prices. We recommend that purchasers exercise caution with their buying decisions. Competition has been strongest in this part of the market, and this can be attributed to a shortage of properties available for sale” said Mrs. Swallow.
“At present we are starting to see more houses come onto the market. We therefore expect the small value bubble which was created by the listings shortage to ease. This suggests a delay in the more traditional spring and summer market activity and it will probably take a couple of months to see the effects in the statistics” said Mrs. Swallow.
Dunedin
Property values in Dunedin increased by 4.1% over the past year (calculated over the three months ending November 2009 in comparison to the same period last year), down slightly on the 4.3% annual growth reported in October. The average sale price in Dunedin increased from $268,253 to $271,460.
Mr. Tim Gibson of QV Valuations said; “Interestingly, our figures for Dunedin City this month have moved backwards for the first time in quite some time. This slight fall in annual growth is due to how the market was moving 12 months ago rather than a decline in values in recent months. In fact values in Dunedin City have continued to increase, as they have since earlier this year. The monthly average sales price has also increased slightly.
“Market movement has been driven by a lack of listings over the previous three to four months, although recent indicators point to more properties being listed. This could start giving buyers more choice and bargaining power in the short term. This may also bring more balance to the market over the next few months, softening the high value growth which has occurred in recent months” said Mr. Gibson.