Monday 11th September 2006

Residential Property Market Growing at 10.5%

QV’s residential property statistics released today show a 10.5% growth in national property values in the past year (calculated over the three months ending August 2006 in comparison to the same period last year). The growth rate dropped from 11.1% reported in July. Over this period, the New Zealand average sale price was $340,473.

There were differing trends across the main urban areas, with the Auckland City growth rate stable at 7.6% (7.5% in July), and Dunedin growing at 6.2% (up from the 5.8% reported in July).  However, the other main centres all saw growth rates slow with Hamilton at 16.2% (down from 17.5%), Wellington City 9.5% (down from 9.9%), and Christchurch growing 9.4% (down from 10.4%).

“Across the country, there is a gradual easing in the property market.  Prices and hence property values are still higher year on year, with no signs of any dramatic falls, but conversely the demand that was pushing values up faster and faster over the past 3 years has definitely eased back”, said QV spokesperson Glenda Whitehead.

Signs of slowing rates of property growth were also reported in provincial cities: Gisborne 18.2%, Palmerston North 15.8%, Invercargill 11.2%, Napier 6.2%, and Nelson 2.4%.

“With 24.9% annual growth, Rotorua is the only provincial centre to still be growing at in excess of 20%. It was a late starter in this cycle and still in catch-up mode. Several other smaller centres are also growing at rates over 20%. These all tend to be in lower value localities” said Glenda Whitehead.

Main Urban Areas Commentary:

Auckland:
Property values in Auckland City have grown by 7.6% and on the North Shore by 7.7% (calculated over the three months ending August 2006 in comparison to the same period last year), similar to the rates reported in July. The average sale price in Auckland City was $526,283 and $517,566 in North Shore.

Most areas in the wider Auckland market reported slowdowns in property growth rates: Manukau 11.7% (down from 12.4%) and Waitakere 7.8% (down from 8.6%). Papakura’s property values dropped from 13.1% to 11.2%, while Franklin’s growth rate declined from 16.9% to 14%. “Papakura and Franklin have shown the biggest easing in recent months, and are now pulling more into line with their neighbours, perhaps reflecting their later upward start and lower overall value levels at that time” said Glenda Whitehead of QV Valuations

“Those active in the market are now generally faced with the same dilemmas, higher interest rates than in the recent short term, a static rental market in the suburbs and soft inner city rental market, and general affordability factors.   These sobering thoughts, together with a long bleak winter, have definitely put the dampers on the wider Auckland market over recent months.  However, people remain optimistic about the long term returns available from the residential property market, but are making cautious decisions about the short term” said Glenda Whitehead of QV Valuations.

Hamilton:
Hamilton residential property grew in value by 16.2% over the 12 months to August 2006, down slightly from 17.5% reported to July. 

“The easing in the market is most likely a combination of seasonal and prevailing economic conditions.  Sales volume and activity are expected to increase as we enter spring, as is normally the case” said Richard Allen of QV Valuations.

“The average sales price for Hamilton City continued to hover around the $315,000 mark” said Mr Allen.

“Most parts of the city continued to show a slowdown in growth as has been the trend over the last few months, the exception was South East Hamilton which exhibited some resilience and remained stable with annual growth of 16.8%” .

Wellington:
Wellington City’s property values grew by 9.5% over the past year, down slightly from 9.9% reported in the period ending July.  The average sale price in Wellington City was $440,455.

“The Wellington market has eased back to more normal levels. Partly this is due to winter conditions, but there are signs of more buyer discretion and properties taking longer to sell for unusual or unique properties, or where the seller has price expectations that may be too high” said Max Meyers of QV Valuations.

Christchurch:
In Christchurch, property values increased by 9.4% for the year to August 2006, down from the 10.4% growth in July. The city’s average sale price was $329,534. “This gradual decline in year on year growth has now been occurring for the past seven months and ties in with a steadying of the average price achieved for properties” said Mark Dow of QV Valuations.

QV's statistics show a good volume of sales above $400,000 in Christchurch. “There were also seven sales of properties in excess of two million dollars, which is high for the Christchurch market” Mark Dow of QV Valuations remarked.

Commenting on the sale volume trend in Christchurch, Mr Dow said “the trend of declining sales volumes continues for the year on year comparisons, but this appears to be flattening in recent months”.

Dunedin:
Dunedin residential property values have grown 6.2% (calculated over the three months ending August 2006 in comparison to the same period last year), up slightly from the 5.8% increase reported for the period ending July 2006.  The average sale price in Dunedin was $246,605.

“The latest figures for Dunedin City continue the trend of the last few months showing a gradual easing in the residential market. Despite the increasing interest rates and inflationary pressures on the family budget, the QV Residential Price Movement Report is still showing positive growth. There is still an expectation that we will have a period of little or possibly even no growth once higher interest rates impact on those coming off two year fixed rates later this year and early next year” said David Paterson of QV Valuations.

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