Only Auckland City values up on year earlier - QV
Auckland City is the only place in the country to see property values above this time last year, according to the QV indices for February.
Tuesday, March 8th 2011, 12:00AM
by Benn Bathgate
Auckland City is the only place in the country to see property values above this time last year, according to the QV indices for February.
Residential property values have stabilised at a national level in recent months, with February values 1.7% lower than the same time last year, and 5.6% below the market peak of late 2007.
Nationwide values gradually declined throughout much of 2010, but in the past few months have begun to flatten before increasing slightly between January and February, though there remains considerable variability across the country.
"Values for all of New Zealand have levelled off in recent months, but this is mostly due to a rebound in values in the main centres. In contrast, values in the rural and provincial areas have generally continued to decline", said QV research director Jonno Ingerson.
"Overall the property market remains subdued with lower that normal numbers of listings and sales being the main signs of buyer and seller caution. However there are pockets of the market that remain active, particularly the main centres."
Ingerson said variability in values has extended to the main centres.
"Values across the Auckland area increased over the last month, particularly in central Auckland, with the rest of Auckland remaining more or less steady. Values across the wider Wellington area were steady, but increased in Hutt and Upper Hutt, were flat in Wellington City, and decreased in Porirua. In contrast, values in Hamilton and Tauranga have continued to steadily decline," Ingerson said.
He said that Christchurch had seen positive signs after a slow start in the wake of September's earthquake, with increased demand for undamaged housing lifting February values 0.3% above a year earlier.
However, the more widespread damage caused by the February earthquake will again cause sales activity to slow for several weeks or even months.
"It is too early to tell what the affect on values or relatively undamaged houses will be," Ingerson said.
Across the main centres QV's Residential Price Index for February reported values increased in Auckland but remain 0.4% below the year earlier, and while different areas of Auckland are continuing to trend differently, generally values remain fairly stable.
"Within the Auckland region there is a sense of stability. This is reflected in the fact that the values in each area are close to the same levels last month and very similar to what they were a year ago. The only exception is Auckland City values, which rose over the past month, and are now slightly higher than the same time last year," said QV Valuation's Glenda Whitehead.
"There appears to be increased demand for high quality new listings in the former Auckland City. Following some successful auctions and quick sales, there is a feeling that the short supply of quality listings is driving this market positively. This may be causing a localised trend."
"Demand for property is also apparent in Waitakere, with some strong results in recent weeks. First home buyers appear to be the main group purchasing the properties with investors absent in most cases."
However, Whitehead said the same level of optimism was not being seen in the wider Auckland market.
"South Auckland, for example, has seen little activity, with a lack of both listings and sold signs. Papakura and Franklin demand for lifestyle properties continues to be low, sales are taking a long time and prices continue to ease."
In the capital QV's Residential Price Index for February has shown property values have decreased by 2.7% over the past year, though there has been an improvement in values in recent months following decreases seen throughout most of 2010.
"Once again whilst we have seen low sales volumes, which was the case last month, values have increased slightly," said QV Valuations Kerry Buckeridge.
"There has been an increase in properties being listed and a reasonable number of people looking to purchase. However, agents have advised buyers are not committing to properties if they are not exactly what they are seeking."
She said low to medium valued properties appeared to be selling if priced competitively and well presented, and only a few properties have attracted significant interest and competition.
"Residential investors had also started being a little more active but they were firmly yield focused. There is no evidence of investment buyers factoring potential gains onto their decisions."
Buckeridge said there has been a noticeable rise in potential vendors wanting value guidance on their properties and a pick-up in work from people looking to re-finance or top-up mortgages on existing properties.
QV said the February earthquake in Christchurch meant it was too early to assess the impact on the city's housing market, though what happened between the first earthquake in September and February may act as a guide.
"In the months leading up to the September quake, house values in Christchurch were gradually declining, as they were across much of the country. Immediately after the earthquake house values began to increase, and by November had risen about 3% before levelling through to February. If we assume that values would have continued to decline if there has been no September earthquake, then house values in February were probably 5% higher than they would have been," said QV.
QV said as its house price index is based on the last three months of sales data it would suspend publication of the index for Christchurch, returning when sufficient data allows.
In Hamilton property values decreased by 3.9% over the past year and have continued to fall over the past couple of months.
"The values in Hamilton have continued to slide," said QV Valuations Richard Allen.
"This varied by location when you compare month on month. North East and South East of Hamilton decreased whereas South West and Central City/North West showed a slight increase. Overall the average sale price has decreased to its lowest level in 12 months."
"The surge in sales activity and volume that traditionally occurs over summer has not happened this year and Hamilton's residential market remains subdued," he said.
In Tauranga property values decreased by 3% over the past year, and while values have continued to fluctuate in recent months, the general trend is downwards,
"Property values in Tauranga have continued to ease. This is the continuation of the pattern over the last eighteen months to two years. The market is very subdued with little activity," said QV Valuations Shayne Donovan-Grammer.
"There are no indicators that suggest the market will improve in the short to medium term. Buyers in this region purchase for capital gain and with that unlikely for quite some time they are understandably cautious."
Dunedin saw a 2.9% fall in values, though values improved slightly last month after a declining trend in previous months.
"Even though values for Dunedin City showed a small increase for February it is too early to indicate whether this means values are stabilising. Also, the sales volumes are still lower than the same period on 2010," said QV Valuations Tim Gibson.
"There appears to have been greater interest in lower valued property compared to late 2010. The likely reason for the renewed interest in these properties is the lower values, which have made them a more desirable investment."
The continued slide in values over recent months means none of the provincial centres have values above the same time last year.
Compared to last year, values are down in Whangarei (-5.3%), Rotorua (-3.2%), Gisborne (-7%), Hastings (-2.8%), Napier (-0.5%), New Plymouth (-3%), Wangahui (-4.3%), Palmerston North (-3.6%), Nelson (-0.1%), Queenstown (0.3%) and Invercargill (-2.8%).
Benn Bathgate is a business reporter for ASSET and Good Returns, email story ideas to benn@goodreturns.co.nz
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