QV urban areas highlights - June 2008
The latest Quotable Value statistics are out for June. To view your region quickly, click on the links below.
Monday, July 14th 2008, 12:00AM
by The Landlord
Main urban areas commentary
Auckland
Hamilton
Tauranga
Wellington
Christchurch
Dunedin
Auckland
Property values in the Auckland region declined by 1.0% over the past year, down from 1.8% growth recorded in May. The average sale price for the region showed a slight decline to $504,550.
“Our valuer observations around the Auckland Region are similar to last month, although now we are seeing the wider economic effects impacting further on attitude and affordability within the housing market,” said Glenda Whitehead of QV Valuations.
“Activity in Waitakere City is still ticking over. The well presented and realistically priced properties are selling, while others are sitting on the market for much longer. Activity in areas that have been traditionally popular such as Te Atatu Peninsula, Titirangi and West Harbour remains fairly steady. However the suburbs offering more group style housing such as Ranui, parts of Massey and Kelston are pretty slow. Buyers are active, but they continue to be slow to make decisions, and are looking at everything available before doing so. Vendors are gradually coming around to the reality of the slower market that has been with us since January,” Whitehead said.
“In Auckland City, buyers remain very discerning, avoiding potential problem properties such as monolithic construction, large sites that would be hard to redevelop, and investment properties that won’t cover finance costs. Properties that are selling are those with the 'x' factor, and good sized family homes – but they must still be realistically priced. Buyers continue to bargain aggressively. In some areas this is leading to a stalemate, causing properties to be withdrawn from the market,” she said.
“Properties on the North Shore are taking extended periods to sell, with considerably less activity at open homes, and agents report limited enquiry. The Shore has some of Auckland’s more expensive suburbs, with the popular school zone suburbs remaining resilient. Unless there is financial stress involved, vendors are waiting for their price or withdrawing from the market. The decline in average sale price adds further evidence that the Shore has also been affected by the downward trend that is affecting the whole market,” said Whitehead.
Hamilton
Property values in Hamilton declined by 2.5% over the past year, down from the 0.5% growth recorded in May. The average sale price for the city declined to $364,441.
“The significant decline in property value growth that we have seen over the past couple of months has continued and QV’s June results now show all areas of the city sliding into negative territory for the first time. This decrease in the residential property values has been driven by the continued decline in sales volumes, a good supply of properties on the market, the impact of increasing interest rates and decreasing immigration,” said Richard Allen of QV.
“The residential property values in the Central City/North West area of Hamilton decreased to -3.0%, the South West decreased to -3.9%, Hamilton North East decreased to -1.6% and South East Hamilton decreased to -2.5% in June,” he said.
“The anecdotal evidence we have been reporting which suggests some properties are selling at reduced prices, and that the current market is favouring buyers, is now also reflected in the average sale price for the city which declined from $368,089 in May to $364,441 in June. It will be interesting to see if a downward pattern in the average sales price emerges over the next few months or it continues to exhibit the resilience it has done over the last six months fluctuating between a low of $359,668 and a high of $368,089. At this stage our expectations and the general feeling is that sale prices are likely to fall a little more before leveling out as we enter the spring months,” said Allen.
Tauranga
Property values in Tauranga declined by 1.2% over the past, down from the 1.1% growth reported last month. The average sale price increased to $450,453.
“While the volume of sales occurring in the residential property market has been slow over the past year now, the last couple of months have seen it fall away at a fairly rapid rate. Buyers seem to be in hibernation and this has caused a large build up of available properties on the market,” said Shayne Donovan-Grammer of QV.
“Well presented properties which are realistically priced do sell sooner or later. Mixed with this though is the fact that mortgagee sales are now commonplace. We are seeing instances where speculative builders are struggling to sell at cost and there is a certainly a clear drop in subdivision section values,” he said.
“The increase in the average sale price is likely attributable to the mix of properties which have sold rather than most individual properties selling for a higher price now than they did in the previous results,” said Donovan-Grammer.
Wellington
Property values in the Wellington region increased by 1.1% over the past year, down from 3.4% reported last month. The average sale price for the region increased to $456,035 from $436,635 in May.
“Whilst property values in the Wellington area show 1.1% year on year growth, the trend confirms we are entering a property market with declining values. This is supported by the fact that over 50% of the sales in Porirua, Wellington, Upper Hutt and Hutt City are now below the Rateable Value (RV) that were effective in August and September last year,” said Max Meyers of QV.
“The number of transactions taking place is continuing to fall and this will affect prices because of the particularly low level of demand. This is partly the result of the over-active property market we have experienced in the last couple of years. Based on a typical market response, a correction to the high number of sales and high prices levels is to be expected. However, of greater concern is that the low demand is also influenced by an affordability issue and the current economic outlook and these influencers are taking buyers out of the market and holding prices down,” he said.
“Properties that are both well presented and well located are opening up a bigger price gap on those that are offered with some less attractive features. All are being more competitively priced and this trend will continue with more significant discounts required to appeal to current buyers. Buyers now have the ability to choose what best suits them and should take the opportunity to do their research on several properties so they can find the negotiable sellers and make competitive offers while there is the opportunity to do so. There should be some good buying this side of Christmas for those that are prepared,” said Meyers.
“An unexpected feature of the current QV results is the increase in average sale price in most Wellington region locations in June. This is attributable to a changing mix of the properties being sold, with a decline in the number of sales of properties under $500k,” said Meyers.
Christchurch
Property values in Christchurch decreased by 0.2% over the last year, down from 1.9% growth reported last month. The average sale price for the city increased slightly to $368,016 for June, an increase of $5,035 from May. This increase is due to the change in mix of properties selling rather than a positive movement in individual property prices.
As predicted last month the annual growth in property values has diminished to the point that they are now slightly lower than this time last year. The squeeze on property values is expected to continue during the winter months with hopes being placed on improved activity in the residential property market in spring. The Eastern suburbs continue to suffer the greatest decline in property values, this month showing values 1.9% lower than the same period last year.
“Sales volumes remain low with purchasers in no hurry to buy property. There are still a number of purchasers with available cash or finance waiting for either the right property or the price to be right, but as yet they have been slow to make their move,” said local QV manager Mark Dow.
“Residential property values have stalled or dropped across nearly all types of residential homes and across most locations. Our statistics show some locations at levels slightly above where they sat a year ago, however the trend in these locations is downwards and we would suggest it is only a lag effect that keeps these locations above break-even. A drop off in activity is particularly notable in the sale of vacant residential land; this in turn is impacting on the number of new homes being constructed,” he said.
"While the market is hard on those wishing to sell their home, the situation for those looking to buy hasn’t looked this good for many years. Buyers currently have the luxury of time and choice when making a purchase decision,” said Dow.
Dunedin
Dunedin’s residential property values decreased by 4.3% over the past year, down further from the 2.2% decline reported last month. The average sale price in Dunedin increased slightly to $265,484.
The rate of property value decline is greatest in the Central/Northern part of the city where values have decreased 6.7% year on year. In contrast, the Peninsular/Coastal areas are still showing a slight increase of 0.2% value growth.
“There is a significant increase in the number of houses available for rent and the letting agents are reporting an easing in residential rentals as a result. This substantiates our previous anecdotal reports of vendors renting their properties rather than accepting a lower selling price,” said David Paterson of QV.
“The residential property market is a reflection of the economy as a whole and purchasing decisions for housing are influenced by affordability. Continued increases in the cost of living has resulted in people holding back on bigger ticket items until there is a clearer picture in terms of the economic outlook,” he said.
“There is some concern that a significant number of the sales now occurring are from vendors that for one reason or another are in a position where they have to sell the property. Under normal market conditions these transactions would not be regarded as fair market sales; however due to the low number of sales occurring and in the absence of true market sales they will inevitably influence the market level,” said Paterson.
“It is difficult to predict what will happen over the next few months. Traditionally the volume of sales picks up in the spring but whether that occurs this year will depend on the wider economic outlook. It is likely that we will see a continuation of the current trend and really the best we can hope for in the short to medium term is for prices to level out for a period,” said Paterson.
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