More evidence of a housing market slowdown
QV's latest house sales data support the view the residential property market is slowing. Its latest numbers show the first fall in property values since January.
Monday, October 8th 2007, 12:00AM
by The Landlord
There are further signs that the property market is starting to ease and that prices may begin falling soon.
Last week Barfoot and Thompson's monthly Auckland sales stats showed a significant slowdown in the residential property market. Today QV has released its September statistics which also show a slowdown, albeit smaller than Barfoots.
QV says that property values, in the year to September were 13.2% compared to 13.3% in the 12-month period to August.
"We may be seeing the first signs that the rate of increase in property values is flattening," said QV spokesperson Blue Hancock. "Residential sales volumes have been easing for several months and that trend can only continue for so long before it starts to impact prices".
"2007 has seen the value of New Zealand properties increase at a higher and higher rate, but our September figures show a marginal drop. Although it’s only a very minor slowdown, this is the first time since January 2007 that our statistics have shown the rate of growth in values to be slowing," Hancock says.
Of the main urban centres, Wellington property values grew 14.1% (down from 14.5% reported last month) and Christchurch dropped from 14.1% to 13.1%. Auckland City held steady at 12.1% (12% last month) and Hamilton and Dunedin increased to 14.4% and 10.4%, respectively.
In the provincial centres, growth in property values in Invercargill increased marginally to 34.6% with Gisborne easing from 25.3% last month to 21.8% this month. Taupo slowed to 3.1%, Palmerston North to 13.7%, Nelson to 13.1%, and growth in Queenstown property values slowed from 11.6% to 10.8%.
The average sale price for New Zealand residential properties increased to $404,089.
A full breakdown of what has been happening in the Main Urban Centres follows.
Main Urban Areas Commentary:
Auckland
Property values in the Auckland region increased by 13.3% over the past year (calculated over the three months ending September 2007 in comparison to the same period last year). The average sale price for the region was $512,964.
"The Auckland region continues to see a trend of steady growth in property values. Annual growth rates in all the main urban centres were up slightly from last month with the exception of Rodney where growth eased to 14%," Glenda Whitehead of QV Valuations said.
"Reports from our valuers across the Auckland region have been consistent with feedback that the number of listings has increased since winter but not significantly. There are buyers out there, but not in abundance, and they are acting cautiously."
"Auckland City's 'year on year' growth was steady at 12.1%. Growth figures were flat across the majority of areas, with some increases in the eastern part of the city. Conversely the average sale price for the city decreased slightly this month to $593,772 from $594,876 reported last month," Whitehead said.
Hamilton
Hamilton’s property values increased by 14.4% over the past year. The average sale price for the city was $365,515.
Residential property value growth in Hamilton increased moderately in September to 14.4% from 14.1% in August. This was largely a result of continued growth in North East Hamilton, which grew from 14.3% in August to 15.9% in September.
"Three of the four areas in Hamilton eased, with South West Hamilton decreasing 1.8%, North West Hamilton decreasing 0.9% and South East Hamilton decreasing 1.0%, suggesting the market is finally beginning to slow as has been predicted by a number of commentators," QV Valuations Richard Allen said.
"Although demand softened in most areas this did not have a negative influence on the average sale price in Hamilton which increased from $358,944 to $365,515. This suggests that the residential property market in Hamilton continues to exhibit some durability even though interest rates continue to increase."
"Expectations are that sales activity will decline as the interest rate increases impact. However, the general feeling is that sale prices are likely to remain fairly static rather than decrease," Allen said.
Tauranga
Tauranga property values grew 8.2%. The growth rate is similar, but up slightly on the 7% reported for August.
"The Tauranga property market continues to be somewhat flat with relatively minor increases over the past 6 months," says Christopher Boyd of QV Valuations. "There was an improvement in the average sale price from $433,748 last month to $438,703 this month".
"Two major indicators usually considered when following market trends are sale prices and volumes. Sale volumes tend to show the greatest initial response and volatility in reflecting the confidence within the property market. Changes in sale prices, and hence changes in QV's growth rate index, tend to follow on from the pressures created by changing sales volumes," Boyd said.
"Most parts of the Tauranga market are still showing small increases in property values but sales volumes have been in decline with numbers below half what the city was previously experiencing" said Mr Boyd.
Wellington
Property values in the Wellington region increased by 16.3% over the past year, down from 16.5% reported last month. The average sale price for the region was $447,243.
"The time delay between a change in the market and the subsequent change in property values creates opportunity for sellers and risk for buyers. The Wellington market is not showing normal spring activity, with a lower volume of sales," QV Valuations Max Meyers said.
"Most areas of Wellington are showing signs of easing back with a slight drop in the average sale price. The exception is in the Hutt Valley where despite falling sales volume prices are still holding up."
Christchurch
Property values in Christchurch increased by 13.1% over the past year (calculated over the three months ending September 2007 in comparison to the same period last year) down from 14.1% reported last month. The average sale price for the city was $364,357.
"The lower end of the market continues to have the largest volume of sales. First home buyers and investors are still active in the lower price brackets while the upper end of the market is more cautious. Prices being negotiated for properties are generally static in Christchurch. This is also reflected by agents putting increasing pressure on vendors to be reasonable in their expectations" said Mark Dow of QV Valuations.
"Our valuers have noticed an increasing swing towards vendors using low fee agencies, many selling properties at around 1% commission. In the past there has been some caution at using lower cost agents, many fearing they might not achieve the best price. There is an increasing trend to use a valuer to remove any pricing uncertainties" said Mr Dow.
"The market in the provincial centres is mixed, with Selwyn, Waimakariri and Banks Peninsula all recording lower annual growth rates from last month, while Hurunui, Ashburton and Timaru continued to have improving annual growth" said Mr Dow.
Dunedin
Dunedin's residential property values increased by 10.4% over the past year (calculated over the three months ending September 2007 in comparison to the same period last year), up from 9.6% reported last month. Over this period, the average sale price in Dunedin was $270,254.
"The easing of the annual growth reported last month has levelled off following a slight increase this month. Our valuers have reported increased inquiry over the last few weeks following a quieter period in late August and early September. This may be the result of the usual spring flush where the market traditionally picks up after winter," QV Valuations David Paterson said.
"Agents are reporting a similar trend with increased listings and properties selling close to listing prices. There is some concern that the increase in listings may not be matched by a corresponding increase in demand and this may result in an easing in prices."
"Different patterns of increases in property values are seen across the city. The central/northern part of the city is growing at 6.7%, a slower rate than last month at 7.3%. While Taieri at 12.6% and the southern part of the city at 12% have rebounded somewhat," Paterson said.
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