Monday 14th November 2005

Property values grow 14.5%

Statistics released today by QV indicate residential property values grew at 14.5% for the 12 months to October, down from 14.9% growth to September.

Although the growth rate in New Zealand property values eased for the first time since March, it is too early to tell whether this is an indicator of an impending market slowdown.

“To be more certain that the property market was entering a slowdown period we would need to see a consistent trend of easing of growth in property values” says QV spokesperson Blue Hancock. 

“Regardless, we do expect at least a levelling of growth in the property market given expected interest rate rises, falling investor returns and also a slowing population growth rate,” Mr Hancock said.   

While growth rates for most areas were below those reported by QV last month, property values continued to increase at over 20% in a number of areas, indicating there is still buoyancy in the market; Whangarei (30.9%), followed by Hamilton (27.1%), Gisborne (27.7%), and Rotorua (25.7%).

“Most of the continued growth is still coming from areas where there is an availability of comparatively affordable residential property. These areas continue to present good buying opportunities for both investors and first home buyers”, Mr Hancock said.

Main Urban Areas Commentary:

Auckland:
Auckland City property values grew 4.9% over the 12 months to October, down from 5.8% growth to September. Although property value growth rates eased across most areas of the city, residential values grew 8.9% in Southern suburbs, up from 8% growth to September.   

Throughout the greater Auckland region the under $500,000 market is remaining an active sector, which is reflected in the higher property value growth rates reported in areas with lower average prices; Papakura (17.7%), Manukau (13.2%), and Waitakere (12.4%). In the over $500,000 market there are anecdotal reports of greater discrepancies between vendor and purchaser expectations.

Hamilton:
Hamilton continued its trend of strong growth in property values, as values grew 27.1% over the 12 months to October, down slightly from 27.6% growth to September. While property values across all areas of the city continue to grow in excess of 20%, South Western (31.7%) and Central/North Western areas (28.9%) are leading the way.  

The continued buoyancy in the Hamilton market still appears to be driven by the relative affordability of residential property in Hamilton, making the area attractive for out of town investors and home buyers. 

Wellington:
Residential property values in Wellington City grew by 11.3% over the 12 months to October, consistent with figures reported to September. Growth rates in the Western (9.6%) and Central City/Southern suburbs (8.6%) abated slightly from figures reported to September, although property value growth rates in these areas are higher compared to those reported 6 months ago.   

Not surprisingly there is still strong demand for affordable property, making the mid to lower end of the market the most popular and active sector. The popularity of this market is reflected in larger increases in property value growth in these areas, including Upper Hutt with 16.8% annual growth and an average price of $250,697. 

Christchurch:
Residential property values in Christchurch grew 18.1% annually to October, easing from 19.1% growth to September. Although the growth rate eased, it still remains above the national average of 14.5% growth, reflecting the current buoyancy in the Christchurch market. 

While the market is still buoyant, there are some signs of caution appearing with some buyers beginning to delay their property purchase, which may be tied in with speculation around interest rate rises.  

Dunedin:
Property values in Dunedin grew 16.2% annually to October, down from 23.2% growth to September. This slowing in the growth rate may support the expectation that the current level of growth in Dunedin is unsustainable. 

There remain a good number of listings in the Dunedin residential market with plenty of buyers, while properties that are realistically priced are still selling quickly. However, vendors are beginning to accept that asking prices may be unrealistic in some cases, and there is a tendency for vendors to meet the market rather than hang out for their asking price.

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