Almost no house price growth: QV

A far more bearish picture of the housing market has emerged today, in contrast to what the Real Estate Institute painted on Friday. QV says the residential property market has gone nowhere in the past year, and the signs are it will get worse.

Monday, July 14th 2008, 12:00AM

by The Landlord

It reports a 0.1% growth in national property values over the past year (calculated over the three months ending June 2008 in comparison to the same period last year), down on the 2.4% growth reported in May.
The only positive news is that the average sale price increased slightly to $392,436.

“Property values are clearly on the decline across most of New Zealand’s major cities and main urban areas,” QV Valuations Glenda Whitehead says. “The Wellington region; parts of the Auckland region; and some provincial areas are keeping the national figure positive, but at a meagre 0.1% growth.

“The long anticipated correction in the market, following the years of boom times, is with us,” Whitehead says.

“With market activity slowing dramatically, consumer confidence knocked by increasing interest rates, fuel and food prices, we expect the trend of falling property values to continue. The traditional upsurge in activity in the spring market may reverse the mood of the winter market, however the issue of home affordability may dampen any resurgence in the market for a while to come,” Whitehead says.

“QV’s House Price Index indicates that property values are now less than the same time last year in many areas even though average sales prices have increased. Our index methodology removes distortions created by averages and medians where there is higher activity in one part of the market,” Whitehead says.

Across the Auckland area property values are 1.0% down compared to the same time last year, driven by a 2.4% year on year decline in Auckland City, and a 0.4% decline in both North Shore and Manukau.

There are still annual value increases of 1.5% in Waitakere and 0.6% in Papakura, although this rate of growth has been steadily decreasing in recent months. Hamilton City’s values are 2.5% down on the same time last year, and Tauranga 1.2% down. The Wellington region is still showing a slight increase on last year at 1.1%, although this is down from the 3.4% reported last month. Christchurch property values are -0.2% compared to last year, and Dunedin has declined further to -4.3%.

All of the main provincial centres are showing annual growth rates less than those reported last month. Property values in Whangarei 1.1%, Rotorua 1%, Wanganui 1% and Invercargil 9.9% are all still above last year, but continue to trend downwards. Gisborne -3.2%, New Plymouth -3.8%, Palmerston North -1.5%, Nelson -0.1% and Queenstown Lakes -1.6% are now showing declining year on year property values.

To find out what is happening in the main urban areas use these links: