House price inflation slows 10%
The latest house price statistics show that house price inflation has slowed by more than 10% in the past year. Statistics from QV show that national property values fell 10% when comparing the three month period ending November 30 to the corresponding period last year.
Monday, December 10th 2007, 12:00AM
by The Landlord
QV says that while house prices rose, the increase in the three month period to November this year was 11.4% compared to 12.7% the previous year.
However it also shows there are some wide disparities in prices. For instance in Christchurch, Tauranga and Wellington experienced much larger falls in prices than Auckland, Hamilton and Dunedin.
Some regions experienced falls while others, like Queenstown, Rotorua, Nelson and Taupo showed increases.
QV says the average sale price for residential properties has decreased from $406,176 to $393,198 this month.
"The market continues to slow down as the number of property sales decline, the time to sell increases, and the impact of pricing pressures are felt," QV spokesperson Blue Hancock says.
“The market continues to favour buyers over sellers. Buyers seem content to take their time before committing themselves to purchase and sellers are considering reducing asking prices accordingly," he says.
Of the larger urban centres Christchurch was down from 12.3% to 9.9%, Tauranga was down from 7.7% to 5.4% and Wellington fell from 13.7% to 11.6%.
Most of the provincial centres also reported easing growth in property values. Invercargill dropped to 34.8% this month (from 36.4% last month), Palmerston North decreased to 9.6% (12.4% last month), Napier slowed to 7.1% (7.2% last month) and Gisborne eased to 14.4% (20.4% last month).
In contrast, growth in property values increased in some provincial centres. Rotorua and Queenstown climbed to 11.5% and 15.3% this month (from 9.4% and 13.7% last month), Nelson increased to 13.2% (12.9% last month) and Taupo went up to 3.4% (3.2% last month).
Main Urban Areas Commentary:
Auckland:
Property values in the Auckland region increased by 11.8% over the past year . The average sale price for the region was $508,974.
"Within the Auckland region the annual growth rates are slipping back. The average sale prices are also easing back with many of these now reflecting values similar to those experienced in the June to September period of this year" said Glenda Whitehead of QV Valuations.
"The market seems to be consolidating with buyers and sellers acting more rationally. Although, we are noting in many areas a greater divergence between asking prices and actual sale prices, and an increasing time to sell," Whitehead says.
"In recent weeks our valuers covering the Waitakere area have noted a pick-up in activity in the market place, prices still appear to be holding their own in most areas. Agents report that vendors are reluctant to accept market negativity and buyers are being very stubborn and aren't willing to negotiate. The average sale price for Waitakere of $401,479 now reflects similar levels to August with the annual growth rate of 12.8% very similar to 12.7% reported last month."
"Within Auckland City we have reports of the market being more discerning in its choice of property. Older well-built family homes are being favoured over modern monolithic type town houses. Relatively good prices are still being achieved for quality properties. Agents continue to report an expectation gap between vendors and purchasers. Our valuers have received comments that developers are withdrawing from the market," Whitehead says.
Hamilton:
Hamilton’s property values increased by 14.5% over the past year . The average sale price increased to $367,660.
"Declining sales volumes, increasing interest rates, and slowing population growth have finally impacted on Hamilton’s residential market with property value growth decreasing to 14.5% from 15.8% reported last month," said Richard Allen of QV Valuations.
"The Central City/North West area of Hamilton eased from 15.4% last month to 13.5% this month. The South West decreased from 15.4% to 12.9%, and Hamilton North East dropped from 16.6% to 15.3%. The only area to buck this trend was South East Hamilton, which increased from 12.3% to 15.1%."
"Although demand continued to soften in most areas this has not had a significant influence on the average sale price in Hamilton, which decreased slightly from $368,194 to $367,660," Allen says.
Tauranga:
Tauranga's property values increased by 5.4% , down on the 7.7% reported for October. The average sale price for the city was $439,084.
"The Tauranga property market continues to show a lack of spark with modest increases over the 2007 year" said Christopher Boyd of QV Valuations. "Growth rates have improved from a low of 2% in February to a peak of 8.2% in September, but the November figures may confirm a downward trend".
"These changes are all relatively minor in what is a very different market from two years ago. The average sale price for November dropped from $450,122 to $439,084, which represents the first drop we have seen this year,” Boyd says.
"Anecdotal evidence suggests continuing difficulty for the real estate industry in terms of closing deals with a moderate level of inquiry, but few reasonable offers. The upper levels of the suburban apartment market have failed to attract buyer interest for some time, and there are many examples of unsold and unoccupied properties in this sector" Boyd says.
Wellington:
Property values in the Wellington region increased by 13.6% over the past year , down from 15.9% reported last month. The average sale price for the region recorded a decrease of $12,800 from last month to $425,429.
"The feedback from our valuers who have been talking with buyers, sellers, and real estate agents is that the market is clearly coming off a strong period of growth" said Max Meyers of QV Valuations.
"Most areas in Wellington showed easing in annual price growth and a decline in the average sale price, which suggests the whole of the market is slowing down," Meyers says.
"Upper Hutt showed the greatest increase across the region of 17.5%. However, this is a large drop from the 19.8% reported last month and a good indication of an easing property market. Lower Hutt dropped 3.8% from last month to 16.1%. The Northern Suburbs recorded the lowest increase across the region of 11%, while the Eastern Suburbs eased slightly to 11.3% (12.9% last month), and the Western Suburbs decreased to 14.7% (17% last month)," Meyers says. "Reversing the trend, Kapiti Coast and Porirua actually went up this month to 15.3% and 15.8% (from 14.7% and 15.6% last month).
"Expectations are that the softening market will continue into next year as there is clearly a marked reduction in the number of transactions taking place and significant shift in demand and negotiability of vendors," Meyers says.
Christchurch:
Property values in Christchurch increased by 9.9% over the past year down from 12.3% reported last month and 13.1% recorded in September. The average sale price for the city was $359,891, down from $365,152 reported in October.
"The annual price movements came back fairly sharply over the last month, with the average sale price also reducing. The market continues to soften with lower sale volumes, lengthening sale periods and pricing pressures evident. This is especially noticeable in the upper price brackets" said Mark Dow of QV Valuations.
"The caution in the market continues with purchasers taking their time to make an offer on properties. The residential market continues to be patchy and has swung firmly towards a buyers market. We are yet to see the traditional upturn in the market coming into summer,” Dow says.
"The market in the provincial centres had mixed results, with Selwyn, Hurunui, and Timaru all recording lower annual growth rates from last month, while Ashburton, Waimakariri, and Banks Peninsula had improving annual growth."
Dunedin:
Dunedin’s residential property values increased by 8.5% over the past year , down from 9.4 % reported last month, continuing a trend seen over the last three months. The average sale price in Dunedin was $280,024.
"The impact of interest rate increases earlier in the year coupled with the general increase in the cost of living has really put the pressure on home affordability, especially for first home buyers. Interest rate increases have also put pressure on the investment market with significantly less inquiry in this area" said David Paterson of QV Valuations.
"It is clear now that the market is experiencing a slow down with increases in property values and volume. Indications are that value growth will continue to level off over the next few months, however there is no indication at this stage that we will see a drop in value levels," Paterson says.
"Queenstown continues to show strong growth with property value growth rising to 15.3% (up from 13.7% last month). The average residential sale price increased to $738,049 (up from $662,539 last month) driven up by eight sales over the value of $2 million recorded in the period.”
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