QV main urban areas commentary: April 2010
Average sales prices declined in April, although are still substantially above last year's prices, according to Quotable Value's (QV) latest statistics. Find out exactly what's happening in the six main regions in the story below.
Monday, May 10th 2010, 12:00AM
by The Landlord
To view the regions quickly, use the links below:
Auckland
Hamilton
Tauranga
Wellington
Christchurch
Dunedin
Auckland
Property values in the Auckland region increased by 9.5% over the past year (calculated over the three months ending April 2010 in comparison to the same period last year), down from the 9.9% annual growth reported in March. The average sale price for the region decreased from $546,062 to $532,538.
Glenda Whitehead of QV Valuations said; "Usually by May we would have a strong indication of the overall flavour and direction of the residential market, but this year the messages we are receiving are a mix of positives, negatives and neutrals. The end result is a relatively flat market without a discernable label at present. 2009 dealt us a much more buoyant market when we expected a flat one, so perhaps we are now having a flatter, more sluggish year in 2010".
"The general consensus from our valuers working in and around the Auckland region is that the market remains steady, and that it continues to look for signals from the wider economy," she said.
"In the west, there is still a reasonable amount of activity in the $370,000 to $550,000 value range. Home and income properties remain popular with investors, due to gaining two income streams off the one site. Buyers continue to thoroughly research the market, looking at everything available before making offers. Indications are that investors continue to wait for the budget announcements on the changes to property tax laws," Whitehead said.
"Auckland city activity continues to show mixed signals. There appears to be some cherry-picking by buyers of the listings available, while other seemingly quality properties linger. With relatively low volumes of sales and the diverse spread of property types sold to date, there is no cohesive picture of where the market is leading. We continue to see localized pockets of activity, sometimes resulting in healthy sale prices, while other properties appear to stay on the market for longer than usual, or sell below expectation with no clear indications of why."
"Looking forward, we believe values will probably fluctuate within a narrow band, essentially indicating a fairly stable market. However, this balance could be tipped either way by budget announcements or interest rate movements as we move through the year. The residential market often interprets data or sees the future in ways we often can't predict, altering values accordingly," Whitehead said.
Hamilton
Property values in Hamilton increased by 2.7% over the past year (calculated over the three months ending April 2010 in comparison to the same period last year), down on the 3.8% annual growth reported in March. The average sale price for the city decreased from $365,915 to $357,200.
Richard Allen of QV Valuations said: "Although this is the second consecutive month where year on year growth has trended backwards, it would be a little premature to suggest that we are seeing the start of a downward trend. Residential property values in Hamilton City continue to fluctuate within a very narrow band, as they have done for the past six months or so."
"During April, most parts Hamilton, with the exception of Hamilton North East, experienced a slowing of year on year growth. This was most prevalent in South East Hamilton which decreased from 4.9% in the year to March, to 2.5% in the year to April," he said.
"It appears that uncertainly around May's budget announcements and the likelihood that interest rates will increase mid year is currently dampening buyer demand and stifling value growth in the Hamilton residential market."
Tauranga
Property values in Tauranga increased by 0.5% over the past year (calculated over the three months ending April 2010 in comparison to the same period last year), up slightly on the 0.1% annual growth reported in March. The average sale price for the region decreased slightly from $413,173 $412,080.
"The residential property market in Tauranga has continued to stall over the last month. The much anticipated budget announcements later this month should bring some clarity and direction to the property sector, particularly for investors. While many commentators over the past months have attributed a quiet market to the budget announcement, time will tell whether we see a lift in activity next month. With the announcement so close, it seems plausible that this has been a factor playing on buyers' minds. Whilst most budget attention has focused on rules around investing, general household affordability through tax cuts is also a key issue which could act on the market," Shayne Donovan-Grammer of QV Valuations said.
"Lending difficulties have also contributed in slowing down property decisions, with banks being stricter on their criteria. First home buyers are still the most active sector and good property under $350,000 has a higher chance of selling. It is a buyer's market, and while prices are fairly sharp, there haven't been too many heavily discounted sales of late," he said.
Wellington
Property values in the Wellington region increased by 7.1% over the past year (calculated over the three months ending April 2010 in comparison to the same period last year), up on the 6.6% annual growth reported in March. The average sale price for the region increased slightly from $458,260 to $460,365.
Pieter Geill of QV Valuations said: "We seem to be getting some interesting signals from the residential property market in and around Wellington. It appears as though the Hutt Valley is a little more buoyant than Wellington and Porirua, where values have basically flattened out in the past few months. In saying this however, the top end of the market is very active in and around Wellington."
"In our Wellington regional office, our registered valuers are busier than usual completing valuation work for home buyers and sellers. Buyers are definitely around and it looks as if the large number of listings which started accumulating earlier this year is starting to move. Anecdotally, it seems as if properties are selling faster than new listings coming to market, or perhaps even being withdrawn from sale and moved to the rental market. This phenomenon is at least ensuring values aren't going backwards for the time being."
"Vendors are becoming more realistic in meeting the market. Consequently, we are busy with owners who are thinking of selling but want a market value on their property before entering into the selling process. This may be due to the uncertainty surrounding the real estate market at present, which is causing people to get advice before making any major commitments. Similarly, some agents are even suggesting their vendors get an independent market valuation to align their expectations with the market," he said.
"Looking forward, it is very difficult to pick what values might do. We are entering the typically slower part of the year for real estate and the new Government budget is about to be announced. At the very least this will help some to make a decision, one way or another," Geill said.
Christchurch
Property values in Christchurch increased by 6.9% over the past year (calculated over the three months ending April 2010 in comparison to the same period last year), steady on the 6.9% annual growth reported in March. The average sale price for the city decreased from $374,117 to $367,688.
Melanie Swallow of QV Valuations said: "Residential property values in Canterbury have remained static through April 2010 and consequently year on year growth has remained unchanged from March. The Hill suburbs showed a slight lift of 0.3%, with the Central and North suburbs lifting 1%, while the balance of Christchurch showed an easing of year on year growth from March. These small movements essentially cancel each other out when looking regionally."
"There is still more housing stock available for sale than prior to the Christmas period, although agents are reporting fewer new listings in April. Overall, the increase in listings since the Christmas period has ironed out the small short fall in supply that had been driving values late last year. Properties currently for sale need to be sharply priced to generate interest," she said.
"We are hearing about a reduction in buyer enquiry and banks also report a decrease in lending activity. The mood overall is subdued with buyer behaviour cautionary, perhaps in anticipation of the May budget. There appears to be an element of wait-and-see before major property decisions are made, and given that market indicators suggest a plateau in values, we could even see values easing over the slower winter months."
Dunedin
Property values in Dunedin increased by 7.5% over the past year (calculated over the three months ending April 2010 in comparison to the same period last year), up slightly on the 7.3% annual growth reported in March. The average sale price in Dunedin decreased from $282,897 to $275,142.
Tim Gibson of QV Valuations said: "These latest statistics confirm that values in Dunedin's residential property market have remained fairly static since December. This static growth is probably caused in part by market uncertainty prior to the government budget announcement later in May."
"Uncertainty appears not only to be influencing investors, as the volume of family house purchases appears to be down as well. This could have the effect of stock taking longer to sell due to less active buyers in the marketplace at present," he said.
"There is some evidence that the top end of Dunedin's market is holding up, with nine sales occurring in the seven hundred thousand dollar plus bracket for the month of April. This included one residential sale of over two million dollars. This has been the highest volume of sales occurring in this bracket for some time."
"Within Dunedin City, the Taieri area has been the most buoyant area, with annual growth of 10.2% to April, up from 7.3% to March. The other areas within Dunedin have experienced a decrease in their annual change, with Southern Dunedin easing the most since March."
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