Tuesday 7th December 2010
Property values begin to stabilise
New Zealand property values are beginning to stabilise according to the QV residential property indices for November.
This time last year values were steadily increasing from a low in early 2009. This increase continued until March 2010, then values began to gradually decline. As a result the gap between values this year and last year has closed further to 0.3 percent. The rate of decline has slowed in recent months and it appears as if values are beginning to stabilise. Values are now 5.6 percent below the market peak of late 2007.
“There continues to be a relatively low number of house sales, as has been the case for most of the year. Securing funding from banks remains difficult for some potential buyers, while others are taking their time over purchase decisions” said QV.co.nz Research Director, Jonno Ingerson.
“Not all parts of the market remain slow moving however, with QV Valuers in the main centres still seeing quality properties in established and traditional areas selling quickly and for good prices. This is in contrast to the large number of properties that have now sat unsold for several months” said Mr Ingerson.
“There has been an increase in the number of properties put on the market over the last few months, as is typical of this time of year. However with the low level of sales activity, this is increasing the stock of unsold property. We now expect that many buyers will delay any purchase decisions until the New Year” said Mr Ingerson.
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 has dropped to $397,805 from the $399,055 reported last month.
There are signs that nationwide values are beginning to stabilise, with the strongest signs of this in the Auckland region where values have now been stable for several months. Compared to the same time last year, values are now 1.8 percent higher, but most of this increase occurred between November 2009 and March this year. After falling slightly for a couple of months, values have been more or less stable since June.
Values in Hamilton and Tauranga have also stabilised in the last couple of months after slightly declining for most of the year. Hamilton is now 1.6 percent below the same time last year, and Tauranga 0.9 percent below.
Compared to the other main centres, values in the Wellington area have dropped the most since March this year. Values are now 1.6 percent below the same time last year although in the last month there are the first signs that values in Wellington are also stabilising.
The property market in Canterbury is now beginning to recover well after some initial disruption following the September 4th earthquake. According to information in reports published by the Earthquake Commission less than 5% of the properties in Canterbury suffered major land damage. Since the earthquake there have been very few sales of houses in badly damaged areas, but properties with little or no damage are now beginning to attract good interest. The sales process is still taking longer than usual as buyers, banks, and insurance companies complete thorough checks on the properties before completing the sale.
The significant slowdown in the number of sales, and the delays in the overall sales process in Christchurch following the earthquake mean that the QV residential price index cannot yet be used to measure the change in property values after the earthquake. Preliminary results show that property values have bounced back after the earthquake with October 3.2% higher than the pre-earthquake trend.
Values in Dunedin have continued to be variable in recent months, but in general have been in gradual decline all year and are now 1.2 percent below the same time last year.
Values remain above the same time last year in Wanganui (1.3 percent) and Nelson (1.9). Values are similar to last year in Rotorua (0.9), Hastings (0.6), Napier (0.9), New Plymouth (-0.6) and Queenstown Lakes (0.9). Values are below last year in Whangarei (-2.1 percent), Gisborne (-5.1), Palmerston North (-1.3) and Invercargill ( 1.7).
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 Auckland Region |
| 1.8% |
| $526,659 |
| Hamilton |
| -1.6% |
| $348,591 |
| New Plymouth |
| -0.6% |
| $339,698 |
| Palmerston Nth |
| -1.3% |
| $280,644 |
| Christchurch |
| N/A |
|
| Queenstown |
| 0.9% |
| $558.059 |
| Invercargill |
| -1.7% |
| $211,463 | |
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| Whangarei |
| -2.1% |
| $305,036 |
| Tauranga |
| -0.9% |
| $409,100 |
| Rotorua |
| 0.9% |
| $274,350 |
| Napier |
| 0.9% |
| $328,973 |
| Hastings |
| 0.6% |
| $328,973 |
| Wellington Rgn |
| -1.6% |
| $451,710 |
| Nelson |
| 1.9% |
|
$378,114 |
| Dunedin |
| -1.2% |
| $268,265 |
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| New Zealand |
| 0.3% |
| $397,805 | |
Annual Property Value Change
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 View FAQs on the Property ValueMap
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Main Urban Areas Commentary:
Auckland
QV’s Residential Price Index for November shows that property values in the Auckland region have levelled out in the past few months, although have dropped by 1.0% since March this year. In contrast, values increased by 2.9% in the 4 months to March.
Consequently, values now sit 1.8% above the same time last year, but 2.7% below the market peak of late 2007 as the graph below illustrates:
Glenda Whitehead of QV Valuations said; “Our registered valuers working in the field sense that values in the Auckland region have levelled, reflecting the stability in our statistics over the past few months. At present, this stability in values isn’t lifting activity, which remains uncharacteristically muted for this time of year. The recently reported boost in listings should however provide purchasers with a wider potential pool from which to purchase, which could lead to more turn-over”.
“We are currently valuing a number of properties in mid-to-upper price ranges, with owners upgrading, renovating and taking on larger building projects. This reinforces the trend that many homeowners are just content to stay put, focussing on improving their current circumstances, rather than moving altogether. Also worth noting is the number of first home buyers who are taking advantage of the Housing New Zealand Welcome Home Loan initiative, supported by some of the major banks. With low interest rates and more stock on the market from which to choose, some renters are being enticed into the market, as the buy versus rent equation tips more in favour of buying” Ms. Whitehead said.
“A number of our clients have indicated that they may consider listing in the New Year. However, we sense a lack of commitment to the selling process at this stage, with the wait-and-see attitude persevering. We also continue to hear reports of vendors with unrealistic expectations given the quality or position of their homes. On the other hand, high-quality properties are still attracting good interest and healthy sales prices. We have recently heard of investors on the North Shore looking to sell, with some doing so privately, perhaps to reduce their costs” Ms. Whitehead said.
“With values now undoubtedly much more stable than early this year, we may see confidence grow and as the months move on, more buying and selling activity. Although, with most people winding down for Christmas now, we don’t expect much to happen in this space until next year” 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 November was $526,659.
Hamilton
QV’s Residential Price Index for November shows that property values in Hamilton have held over the past 3 months. Unlike most other major centres, Hamilton did not experience significant value recovery from mid to late 2009. Subsequently, values are now 1.6% below the same time last year, and 10.7% below the market peak of 2007, as the graph below illustrates:
Mr. Richard Allen of QV Valuations said; “November marks the third month of stability in our statistics, indicating that home values are beginning to level-off in Hamilton. However, sales are few and far between, leaving the market fickle and not robust by any means. Given the holiday season is on our doorstep, there seems little on the horizon which could motivate people to act and breathe life into Hamilton’s property market. Perhaps a warm summer and a fresh new year will make a difference, but at this stage we can’t foresee the drastic change in market dynamics needed to completely turn things around”.
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 Hamilton in November was $348,591.
Tauranga
QV’s Residential Price Index for November shows that property values in Tauranga have held over the past few months. Unlike most other major centres, Tauranga did not see significant value gains in 2009. Subsequently, values are now 0.9% below the same time last year, and 11.4% below the market peak of late 2007 as the graph below illustrates:
Mr. Shayne Donovan-Grammer of QV Valuations said; “It has been difficult for the Tauranga market to gain any traction this year and the spring/summer flurry of activity hasn’t really eventuated so far. Sellers have resisted dropping their prices, although realistically priced and well presented homes have tended to sell more readily”.
“On a positive note, values have held better than predicted in 2010 and interest rates have remained steady. Tauranga, with its predicted population growth, is still one of best places in New Zealand to own property, but the market needs to be patient before it can expect another cycle of capital growth. Currently there are too many households with high debt levels, making it tough to either service mortgage repayments or sell, as debt is often higher than net property value. This is because of past lending ratios and a market that has come back 10% or more since the peak. For a lot of would-be buyers, it will take time to get back into balance before activity can resume” Mr. Donovan-Grammer 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 Tauranga in November was $409,100.
Wellington
QV’s Residential Price Index for November shows that property values in the Wellington region have held over the month, after declining by 3.4% since March this year. In contrast, values increased by 1.9% in the 4 months to March.
Consequently, values now sit 1.6% below the same time last year, and 6.5% below the market peak of early 2008 as the graph below illustrates:
Mr. Kerry Buckeridge of QV Valuations said; “The usual spring flush, in terms of both sales and listings, appears to have only just materialised over the last couple of weeks. This is the first sign of stability in Wellington’s housing market, after a steady decline since early this year, where the market was characterised by few listings and a low number of sales. Good properties which have been well marketed are beginning to attract multiple offers, a sign of stabilising values. However, there is still strong buyer resistance to homes perceived as risky or poorly presented”.
“There are now more properties on the market than a month ago, most of which seem to be priced realistically. Some agents are commenting that the listings have arrived later in the year than usual. On the flip side of the coin there is concern that most buyers won’t be willing to act before Christmas and that many properties will remain unsold until early next year” Mr. Buckeridge said.
“In recent months some prospective purchasers have commented that they have had trouble finding properties which tick all their boxes amongst those listed. QV valuers in Wellington have noticed an increase in the number of people undertaking substantial additions and alterations to their homes. This seems to be a popular choice for those who failed to find a suitable type and location of property on the market. The recent increase in listings could well reverse this trend, although probably not until next year” Mr. Buckeridge said.
Christchurch
The significant slowdown in the number of sales, and the delays in the overall sales process in Christchurch following the earthquake mean that the QV residential price index cannot yet be used to measure the change in property values after the earthquake.
Melanie Swallow of QV Valuations said “the number of sales slowed considerably in the weeks immediately following the earthquake, but activity has begun to pick up again. Agents and mortgage brokers comment that it is still taking a longer to put deals together with additional requirements for engineers’ reports and delays getting LIM reports, but the level of activity is still very encouraging”.
“There has been a lift in the number of listings to market, which is what we would have expected to see in September if it had been a typical seasonal market without a magnitude 7.1 earthquake” Mrs Swallow said.
A report published by the Earthquake Commission on November 30th identifies the areas in Canterbury that have been affected by significant land damage. This shows that less than 5% of properties have significant land damage requiring remedial work. The majority of properties in Canterbury have either no damage, or minor damage as a result of shaking.
There have been very few sales in areas with significant land damage, as these properties generally require significant repair work. Almost all the sales since the earthquake are from areas that did not suffer land damage.
Values in Christchurch were gradually declining in the months prior to the earthquake. Values since then have increased again, and in October were 3.2% higher than the trend. A full report of the change in the property market since the earthquake is available on the QV website.
Mrs Swallow said “agents report plenty of enquiry and a steady demand for quality housing in unaffected suburbs, which is exactly what we would expect to see. The market has had time to take stock of things and now we are seeing indication of some normal market activity beginning to emerge”.
“The local economy is slowly being stimulated by insurance and EQC payouts, bolstering the construction and property industry. This has helped kick start the property market as Canterbury puts itself back together, although delays in the process can be frustrating for people trying to move forward with their lives. On the bright side it will ensure a steady volume of work for some time for Canterbury trades people” Mrs Swallow said.
“Agents, mortgage brokers and bankers have made anecdotal comments that there is a ‘wait until the new year’ sentiment in the market. We expect to see a lift in activity in early summer. The amount of activity at present is a positive sign as the region looks forward to 2011” Mrs Swallow said.
Dunedin
QV’s Residential Price Index for November shows that property values in Dunedin have declined over the past month, and have decreased by 2.2% since March this year. In contrast, values increased by 1.0% in the 4 months to March.
Consequently, values now sit 1.2% below the same time last year, and 5.9% below the market peak of 2008 as the graph below illustrates:
Mr. Tim Gibson of QV Valuations said; “Dunedin’s housing market has showed some minor signs of improved activity, with increasing sales volumes and more interest within the market for the month of November. However, values continue to fluctuate, downwards in this case, evidence that the market is still quite fickle and undecided”.
“QV’s registered valuers have also noticed an increase in requests for valuation reports for finance purposes recently. While some of these are undoubtedly for refinancing purposes, our workload aligns to reports of increased attendance at open homes, alluding to activity on the rise. Time will tell if this trend continues, or merely a rush of pre-Christmas activity” Mr. Gibson said.
“Fundamentally however, the property market is still jittery with fewer sales than normal at this time of year” Mr. Gibson 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 Dunedin in November was $268,265.