Main urban areas commentary: QV
To find out what's happening in the main areas around the country, use the links in the story below.
Monday, October 13th 2008, 9:20AM
by The Landlord
To view your region quickly:
Auckland
Hamilton
Tauranga
Wellington
Christchurch
Dunedin
Auckland
Property values in the Auckland region declined by 7% over the past year (calculated over the three months ending September 2008 in comparison to the same period last year), down further from the 5.8% decline recorded in August. The average sale price for the region decreased to $495,161.
“As anticipated, property values in the Auckland region continued to ease and are now showing a year on year decline of between -3.2% in Franklin and -7.9% in Auckland City. With recent negative economic news flooding the airwaves, the confidence in the residential market is likely to be battered further as we move forward,” said Glenda Whitehead of QV Valuations.
“Until a couple of weeks ago, QV valuers reported that they were beginning to see a pick up in spring activity. However, the latest round of world financial issues, and potentially the influence of the school holidays, has left the market place very dull at present. Sales are evident where vendors are realistic or where they are in a forced situation. In cases where there is a great house and the right buyer the sale still achieves a healthy price in the better areas” Whitehead said.
“The low volume of property sales reflects the fact that many vendors have been unable to sell in the last few months, and some of these have now chosen instead to rent their property. The flow-on effect of this is that more properties are available for rent, and in some areas of South Auckland, East Auckland and Onehunga there is now an over supply of rental property. This over supply is causing some landlords to drop rents in order to occupy the properties. Anecdotal evidence indicates that potential tenants have the luxury of choice in this market and properties that are not presented in top condition are left vacant for longer, even despite dropping rents in some areas” Whitehead said.
“Feedback indicates that many property investors can’t see the sense of selling at prices currently being achieved, as they would not realise an acceptable return on funds invested. Indications are that they are sitting on their investments and waiting for the predicted interest rate decline; and hoping that a resolution to the global credit squeeze will kick start the market again” said Whitehead.
Hamilton
Property values in Hamilton declined by 8.8% over the past year (calculated over the three months ending September 2008 in comparison to the same period last year), down further from the 8.5% decline recorded in August. The average sale price for the city increased to $353,465.
“Whilst 8.8% decline in property values represents a new low for the Hamilton region, the rate of the decline in property values (down a further 0.3% compared with August) is less dramatic than we have witnessed in the previous two months of the quarter” said Richard Allen.
“You may ask whether this means that property values in Hamilton City may be leveling off or whether the market might be taking a very short breather. Given the global financial crisis and credit crunch, high interest rates and the continued lack of confidence in the residential market that is continuing to curb demand, it is most likely the latter. We believe that the downward trend is likely to continue in the short term” Allen said.
“The sharpest year on year decline in property values was evident in the Central City/North West Hamilton which decreased from -8.3% in August to -9.9% in September, and the North East area which moved from -7.3% to -8.0%” Allen said.
“The average sale price for the city rebounded to $353,465 in September up from an eighteen month low of $335,292 in August. This increase is the result of a greater number of houses selling in the higher price bracket” Allen said.
Tauranga
Property values in Tauranga declined by 7.6% over the past year (calculated over the three months ending September 2008 in comparison to the same period last year), down from the 5.3% decline reported last month. The average sale price increased slightly to $446,721.
“The decline in the property market has picked up momentum in Tauranga with no type of property immune. Whilst the market had been tracking poorly this year, it seems that over the last month it has hit a brick wall” said Shayne Donovan-Grammer.
“The slowing of the property market is not good news for most home owners, particularly those looking to sell or those who are financially stretched. However, it represents good opportunities for some buyers. The declining property values may mean that some first home buyers will soon be in a position to enter the market or consider purchasing a property of higher quality or in a better location than what they were previously considering” Donovan-Grammer said.
“I would recommend to the rental investor that in this market it is prudent to secure a property that produces a reasonable return and move away from the preoccupation of looking for short term capital gains” Donovan-Grammer said.
Wellington
Property values in the Wellington region decreased by 5.4% over the past year (calculated over the three months ending September 2008 in comparison to the same period last year), down from 3.8% decline reported last month. The average sale price for the region decreased to $424,098 from $437,061 in August.
“Declining property values continue in Wellington with no sign yet of the seasonal spring lift in activity and sale price. Any potential change to the present trend is being clouded by the uncertainty of the international financial markets. The downward trend in value is expected to continue until there is more certainty in the market and increased availability of finance” said Max Meyers.
“The sharpest decline in property values in the Wellington area was evident in the Hutt City which decreased from -6.1% year on year in August to -8.6% in September. The smallest decrease was on the Kapiti Coast which moved from -2.0% to -2.8%” said Meyers.
“At present there are very low levels of sales occurring, and until buyers have more confidence about finance and property values, we expect prices to continue to decline. This market environment creates some particularly good buying opportunities that we expect to see more of in the next few months” Meyers said.
Christchurch
Property values in Christchurch decreased by 7.1% over the last year (calculated over the three months ending September 2008 in comparison to the same period last year) down from the 5.8% annual decline reported last month. The average sale price for the city decreased to $356,357 for September, a decrease of $1,657 from August.
The sharpest decline in property values has occurred in the Eastern Suburbs which has declined 8% year on year, and in the Central City and Northern Suburbs which declined 7.6%. “There are two forces influencing the decline in these areas. Firstly, we are witnessing a flight to more quality homes in this buyers market, with investors and first home buyers being more discerning. Secondly, there is more pressure at the top end of the market in the tough economic times we are currently experiencing” said local QV manager Mark Dow.
All locations in Canterbury have declined in value from that reported last month. “The reductions in sale prices appear to have slowed slightly, but the direction is still negative. Given the latest economic forecasts and the state of the finance sector the prices in the residential housing market are expected to decline further for some time yet. The traditional home lenders have also tightened their lending policy which will further reduce the pool of potential buyers, leading to more downward pressure on prices” Dow said.
“Spring traditionally brings an increase in activity in the housing market. However, the current environment of deteriorating conditions, negative sentiment and an election, is dampening any signs of a spring recovery” said Dow.
Dunedin
Dunedin’s residential property values decreased by 8.5% over the past year (calculated over the three months ending September 2008 in comparison to the same period last year), down further from the 7.8% decline reported last month. The average sale price in Dunedin eased slightly to $271,971.
The rate of the decline in property value is greatest in the Southern City and the Peninsula, where values have decreased 13.2% and 11.2% respectively year on year. In contrast, the Taieri and Central/Northern City decreased by 7.9% and 6.2% respectively over the same period.
“Consistent with what we reported last month, there has been some levelling off in the rate of decline in the market. We are not confident that this trend will continue in the short to medium term, as the recent tightening of the lending policies of the major banks will begin to impact on the market. The requirement to have a significant deposit will take many first home buyers and investors out of the market, and this will impact adversely on demand, putting further downward pressure on prices” said Paterson.
“Agents are reporting an increased number of sales for September. This may be a result of vendors realising that they have to meet the expectations of the market if they want to sell, rather than being an indication that the market is picking up” Paterson said.
“The reality of the current situation is that there are a number of factors within the local, national and international markets that are impacting on investment decisions. These factors will continue to impact on property prices for some time yet. We can expect further price reductions as the supply of houses for sale increases and demand decreases in the months ahead. In the long term investing in property has always been considered a good option, and that will continue to be the case in the future” Paterson said.
| « Average house price falls in September: QV | Property Investors Show Resilience in Slump: Survey » |
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