Monday 12th November 2007
QV statistics confirm slowing property market
QV's October statistics released today report growth in national property values of 12.7% over the past year (calculated over the three months ending October 2007 in comparison to the same period last year). This has eased from 13.2% reported in September and is the second month the rate of increase has dropped. The average sale price for New Zealand residential properties increased slightly to $406,176.
"The effect of higher interest rates and lessening buyer confidence is now reflected in a general slowdown in market activity and a shift from a sellers market towards a buyers market" said QV spokesperson Blue Hancock. "Recent market indicators confirm that many people do not believe it is the right time to buy" said Mr Hancock.
"Purchasers are being careful and taking a longer time to buy property. Developers and investors are also acting cautiously and seem willing to wait for further market signs to appear. Activity is patchy across a number of regions including the main urban centres. All predictions are for a gradual easing in the market overall, with the pace of any slowdown determined by the spring and summer activity" said Mr Hancock.
All the main urban centres, except Hamilton, reported easing growth in property values. Auckland City decreased to 11.9% (12.1% last month). Wellington City property values dropped to 13.7% (down from 14.1% reported last month), Christchurch eased to 12.3% from 13.1% and Dunedin slowed to 9.4% from 10.4%. Hamilton increased to 15.8% from 14.4% last month.
Most of the provincial centres also reported flattening property values. Gisborne’s recent strong growth eased to 20.4% from 21.8% last month. Tauranga dropped to 7.7%, Palmerston North to 12.4%, Nelson to 12.9%, and New Plymouth was flat at 9.8%. However, some provincial centres continued to increase. Napier’s growth in values leapt to 7.2% from 4.9% reported last month, and Queenstown and Invercargill both continued their strong growth, increasing from 10.8% to 13.7%, and 34.6% to 36.4% respectively.
Main Urban Areas Commentary:
Auckland:
Property values in the Auckland region increased by 12.8% over the past year (calculated over the three months ending October 2007 in comparison to the same period last year). The average sale price for the region was $524,180.
"Like the weather, activity in the Auckland property market has been patchy and dull. The statistics reflect the activity and results of recent months, with a general easing in property value growth rates across Auckland" said Glenda Whitehead of QV Valuations. "Furthermore, even though growth rates are down on those reported last month, they are still firmly in the positive territory, with all cities and regions still recording year on year growth in excess of 10%".
"With the exception of Rodney, the other Auckland areas showed a general easing in the average sales prices, which is typically reflective of more activity within the lower end of the market" said Whitehead. "Properties appear to be taking longer to sell, even in hot spots close to the city such as Sandringham, Kingsland and Western Springs".
"Our valuers are hearing reports that developers are stepping away from infill housing developments as Council costs and time delays associated with getting Titles, squeeze profit margins" said Whitehead.
"While remaining quieter than previous years, there has been a noticeable pickup in activity over the last month, perhaps spring is just slow to come and not quite so colourful this year" said Whitehead.
Hamilton:
Hamilton’s property values increased by 15.8% over the past year (calculated over the three months ending October 2007 in comparison to the same period last year). The average sale price for the city increased to $368,194 (from $365,515 last month).
"Although sales volume and activity continued to decline in Hamilton, in part due to increasing interest rates and decreasing immigration, residential property values for the city increased to 15.8% from 14.4% in September" said Richard Allen of QV Valuations.
Of the main urban centres, Hamilton was the only one that showed a higher year on year rate of growth this month. "There is continued growth in North East Hamilton, which grew from 15.9% in September to 16.6% in October. There also appears to be large one-off increases in the Central City and North West areas of Hamilton, which increased from 11.1 % in September to 15.4% in October, and South West Hamilton which went from 10.4% last month to 15.4% this month" said Mr Allen.
"Although demand softened in most areas of the city it did not have a negative influence on the average sale price in Hamilton, which increased for the fifth consecutive month from $365,515 to $368,194" said Mr Allen. "The residential property market in Hamilton continues to exhibit some durability, but the full impact of recent sales trends is likely to be realised in coming months".
Tauranga:
Tauranga property values grew 7.7% (calculated over the three months ending October 2007 in comparison to the same period last year). The growth rate is down slightly on the 8.2 % reported for September.
"The Tauranga property market continues to be somewhat flat with relatively minor increases in property values over the past 6 months" said Christopher Boyd of QV Valuations. "There was an improvement in the average sale price from $438,703 last month to $450,122 this month".
"Anecdotal evidence suggests that selling timeframes are longer and an increasing number of bargain house hunters are making low offers. Agents also report increased difficulty in closing deals with a widening gap between seller expectations and the offers on the table" said Mr Boyd.
Wellington:
Property values in the Wellington region increased by 15.9% over the past year (calculated over the three months ending October 2007 in comparison to the same period last year), down from 16.3% reported last month. The average sale price for the region was $438,263.
"The trend towards lower price increases is now more evident and consistent with declining activity and increasing selling times" said Max Meyers of QV Valuations.
"Across the region the increase in property values has eased slightly, with the exception of Wellington City's Western suburbs which increased to 17% from 14.8% last month" said Mr Meyers. "The highest average sales price is also recorded in the Western Suburbs at $575,688 (last month $564,537) an area that has not seen the same decline in activity as other parts of Wellington" said Mr Meyers.
"The Hutt Valley continues to outperform the rest of the region and records the highest value increases with Lower Hutt at 19.9% (20.4% last month) and Upper Hutt at 19.8% (20.3% last month)" said Mr Meyers.
"The market should settle back to a more modest rate of price increase. Central locations still have good demand from buyers, in contrast to areas on the edge of the main city areas" said Mr Meyers.
Christchurch:
Property values in Christchurch increased by 12.3% over the past year (calculated over the three months ending October 2007 in comparison to the same period last year) down from 13.1% reported last month and 14.1% recorded prior to that. The average sale price for the city was $365,152.
"The annual price movements continue to ease back, while the average sales price remains fairly static. There is now good evidence of a softening market with lower sale volumes, lengthening sale periods, and pricing pressures evident. Lengthening sale periods is especially noticeable in the upper price brackets" said Mark Dow of QV Valuations.
"Our valuers have noted caution from some developers and investors who are holding off purchasing properties as they wait to see what the market will do. This caution is also evident with the general buying public as they take longer to make a purchasing decision. This has resulted in a fairly patchy market and one which has swung towards a buyers market. It is increasingly important for properties to be well priced to attract a purchaser’s attention" said Mr Dow.
"The market in the provincial centres is also generally down, with Selwyn, Waimakariri, Ashburton and Timaru all recording lower annual growth rates from last month, while Hurunui, and Banks Peninsula had improving annual growth" said Mr Dow.
Dunedin:
Dunedin’s residential property values increased by 9.4% over the past year (calculated over the three months ending October 2007 in comparison to the same period last year), down from 10.4 % reported last month. Over this period, the average sale price in Dunedin was $272,460.
"The current trend is very similar to that experienced last year, where value growth eased from September to November before increasing again in the early part of 2007" said David Paterson of QV Valuations.
"Our valuers have reported a significant drop in inquiry compared with the same period last year. There is a feeling that the high interest rates along with significant increases in prices for fuel, food and other essential items is making purchasers far more cautious in their purchase options in relation to property" said Mr Paterson.
"We've noticed a significant increase in listings, which would indicate that the supply/demand equilibrium has changed more to the buyers favour. A continuation of this trend will see a continued easing in QV’s value growth index" said Mr Paterson.
"Agents are reporting a positive outlook with increasing interest at open homes and an increased number of listings, however at this stage it has not resulted in an increase in the number of sales. Whether this positive outlook will result in an increase in sales activity is yet to be seen. We certainly have not seen the spring flush that is usual in this market" said Mr Paterson.
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