Tuesday, 10 January 2012
2011 Residential Property Market update and review
New Zealand property values in 2011
For the first few months of 2011 values across New Zealand were stable with rising values in Auckland and Christchurch being balanced by falling values in many other areas. From April onwards national values began to increase as most of the main centres, apart from Wellington, began to stabilise. By September values were increasing in all the main centres, including Wellington, as well as in many of the provincial and rural towns, suggesting a nationwide improvement in the property market.
The year ended with the first signs that this apparently nationwide recovery may be faltering. National values increased from November to December, as they continued to do in Auckland, Wellington, Christchurch and Dunedin. However values flattened in Hamilton and Tauranga, and dropped in several provincial towns that previously had been recovering, notably Gisborne and Rotorua.
Low sales volumes in 2011
Despite national values moving upwards during the year, the property market continued to be characterised by lower than normal sales volumes. Sales numbers in 2011 were more than 20% below the long term average, and while up a few percent on the sales volumes of 2008 and 2010, both of those years were the lowest since the early 1980’s, so outside of those two years 2011 is the lowest for 20 years.
Buyer behaviour
Buyers were generally acting cautiously throughout the year, taking their time to do their research before making offers. First home buyers came back into the market in 2011 encouraged by low interest rates, while investors were largely on the sidelines.
This increase in activity at the lower end of the market was reflected in the average sales price of $398,411 for properties sold in the last three months of the year. This was nearly $12,000 less than the average sales price a year earlier, a drop of nearly 3%. This change in sales price is in contrast to the QV index, which is not based on average sales prices, which rose over 4% over the same period. The QV index is a better reflection of the change in market value, not just the value of those properties that happened to sell.
2012 outlook
The property market is heavily influenced by consumer confidence, so it will be fascinating to see how 2012 pans out. Auckland values are likely to increase further, especially given that the population continues to grow, building activity has been weak, and if a lack of new listings of quality properties keeps supply below demand.
Whether values continue to increase in Christchurch depends on a number of factors including the re-zoning of properties to red or green, decisions on the nature and timing of CBD redevelopment, and of course any further significant earthquake events.
Values in Hamilton, Tauranga are likely to stay fairly stable, and whether values continue to rise in Wellington and Dunedin is difficult to pick.
The property markets in the provincial and rural areas are heavily dependent on the strength of the local economies in those areas. A strong rural sector typically has a positive impact on the property values in towns supporting those areas, likewise the coming or going of large local industries can have a significant impact.
While business and consumer confidence seems to be on the increase, there is still some concern about the financial situation in Europe, and what may happen to the New Zealand economy if events there take a turn for the worse. 2012 is likely to be another interesting year for the property market.
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View the latest property statistic data for all areas of NZ 
The monthly statistics provide an indication of how property values around New Zealand have changed over the previous 12 months. Residential sales compiled for the previous 3 months are compared to the same period of the previous year to identify the annual percentage change in property value. QV’s House Price Index methodology is used to generate a residential index for each area by recognising the sales price of each property sold compared to its capital value. This ensures the index provides a measure of change in property values, without fluctuations caused by higher sales volumes in one or more property sectors (e.g. high volumes of apartment sales or investment properties). The Average Sales Prices calculated in the Property ValueMap are based on residential sales compiled by QV for the previous 3 month period. The residential sales included are for residential houses, apartments, flats, home and income properties, and houses converted to flats.