QV statistics confirm slowing property market

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QV's October statistics report slowing growth in national property values for the second month in a row. QV provides its views of what is happening in each of New Zealand's major urban areas.

Monday, November 12th 2007, 12:00AM

by The Landlord

The latest figures show values grew 12.7% over the past year; an easing from the 13.2% reported in September.

The average sale price for New Zealand residential properties increased slightly to $406,176.

QV spokesperson Blue Hancock says, "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. Recent market indicators confirm that many people do not believe it is the right time to buy.

"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".

All the main urban centres, except Hamilton, reported easing growth in property values. Most of the provincial centres also reported flattening property values. Gisborne’s recent strong growth eased from 21.8% last month to 20.4% . 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. 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," QV Valuations Glenda Whitehead says. "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."  

Whitehead says QV's 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.

"While remaining quieter than previous years, there has been a noticeable pickup in activity over the last month."

Hamilton
Hamilton’s property values increased by 15.8% over the past year. The average sale price for the city increased from $365,515 last month to $368,194.

"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," Richard Allen of QV Valuations says.

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.".

"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.

"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," Allen says.

Tauranga
Tauranga property values grew 7.7%. 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 six months," says 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," Boyd says.

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," QV's local valuer Max Meyers says.

"Across the region the increase in property values has eased slightly, with the exception of Wellington City's Western suburbs which increased from 14.8% last month to 17%".

"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," Meyers says.

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).

Myers says: "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."

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," Mark Dow of QV Valuations says.

"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."

"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," Dow says.

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," according to 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," Paterson says.

"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," Paterson says.

"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," Paterson says.

« New property listings in October support buyers’ market

Sales recover while residential property median treads water »

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