Sales volume drop from peak by area

One of the most notable features of the property market over the last three years has been how the number of sales has dropped. Across New Zealand the number of house sales in 2010 was only about half of the number sold in 2003 during the property boom. This drop in the number of sales has affected nearly every city, town and suburb, but we’ve taken a look at the areas that have done better or worse than the rest.

While the number of sales in the main urban areas and provincial towns has dropped by nearly half since the peak, the rural areas have done a little worse and have dropped over half since the peak.

The hardest hit of the rural areas was Waimate District where the number of sales in 2010 was only 17% of peak levels. Sales dropped to 20% of peak levels in Ruapehu District as the rural support town of Taumarunui and the holiday destinations of Ohakune and National Park suffered from the downturn. Kawerau, South Waikato, Wairoa, Rangitikei and Otorohanga also dropped to about 25% of their former peak levels.

Of the rural areas, sales held up the best in Selwyn District, dropping only one third from peak levels. This was driven by strong sales activity in Rolleston, Leeston and Southbridge which are all areas that have seen a considerable number of new houses built since the early 2000’s. The Tasman District was also less affected by the downturn, overall dropping by around one third, with good sales in Motueka, Brightwater and Mapua helping to hold things up.

In general the provincial centres have not been as hard hit as the rural support towns. The worst performing of the provincial centres are Wanganui and Rotorua where the number of sales in 2010 had dropped to around one third of peak levels. Queenstown Lakes District was the best performing of the provincial centres, where sales in 2010 were two thirds of peak levels.

Of the main urban centres, the area formerly known as Waitakere City and Tauranga have seen the most decline in sales volumes, both down to around 40% of peak levels.

In Waitakere, the suburbs of Titirangi, Te Atatu and New Lynn held up best, although still dropping between 40 and 50%. West Harbour, Ranui, Glendene and Sunnyvale were the areas hit hardest, with sales dropping to one third of peak levels. The absence of investor buyers in these harder hit areas is a strong factor, along with a wait-and-see approach by many existing investors.  In areas where values have fallen and owners equity levels have decreased significantly, many now recognise they are better to stay put and hope that value levels recover in the short to medium term rather than sell their properties and be left with little if any equity, and be faced with renting rather than owning.

In Tauranga, Pyes Pa and Matua have done best, dropping by about one third, while sales in Gate Pa and Greerton have fallen around 70% from peak.

The best performing of the main centres were central Auckland (formerly called Auckland City) and Wellington City.

In Auckland, sales volumes are down 35% from peak, and many Auckland suburbs sit at around that level. The suburbs that have dropped more are Otahuhu (down 73% from peak), Panmure (down 69%) and Avondale (down 62%). In these more affordable areas of Auckland, potential buyers’ concerns around job security and difficulty in securing credit, plus a dramatic slowdown in property investor activity have led to a drop off in sales. %).  These areas have also traditionally had high levels of property investor activity which has dropped away in the last few years.

The better performing areas in Auckland are Orakei (down only 16%), Grey Lynn (down 17%) and Mission Bay (down 22%). Suburbs close to the city and those offering schools with good reputations have continued to perform better than the bunch, but sales volumes have been down in all areas.

In Wellington City there has been a drop of 37% in the number of sales since the market peak. Of the larger suburbs, the two hardest hit have been Woodridge and Churton Park which are down more than half. Both suburbs are new subdivisions, and there has been a considerable slowdown in the number of new houses being built which will have caused this drop. The more established suburbs of Khandallah and Tawa also dropped by nearly half. This has been driven in part by families choosing to stay put in these suburbs rather than move on.

The best performing suburb in Wellington was Newtown which has dropped only 14% from peak. It’s close proximity to the city, character housing and relative affordability have ensured it has remained in demand. It is also an area with relatively high turnover as people look to move on to larger houses after a few years as their families grow. The next best are Strathmore Park and Paparangi, which are both down about 20%. Strathmore Park in general is a more affordable suburb, but some of the higher priced properties have been in demand for workers in the nearby Peter Jackson studios. Paparangi is further out of town in the northern suburbs, and being a more affordable area has continued to attract interest from investor and first home buyers.