QV Main Urban Areas Property Report – August 2009

Quotable Value New Zealand

Quotable Value Limited (QV) is New Zealand’s largest valuation and property information company. QV operates from 22 offices throughout New Zealand and has subsidiary companies in three states of Australia.

Main Urban Areas Commentary:

Auckland

Property values in the Auckland region declined by 3.5% over the past year (calculated over the three months ending July 2009 in comparison to the same period last year), a considerable improvement on the 5.9% annual decline reported in June. The average sale price for the region increased from $489,444 to $500,315.

Glenda Whitehead of QV Valuations said; “What a difference a year makes! This time in 2008 the Auckland residential market was in a steep decline, with increasing volumes of property appearing on the market from July to December, and taking prolonged periods to sell. Now the contrast is significant. Values have stabilised over recent months and have even begun to show upward movement in some areas. Listings this winter are light, but are attracting healthy interest, resulting in properties selling relatively quickly by comparison. This is reflected in the year-on-year value change for Auckland, which is now moving quickly back through the negatives toward zero”.

“The North Shore in particular has seen positive activity in recent months. While low listings are still being reported, buyer interest is strong with firm and realistic offers being made to vendors. Most properties put on the market now appear to be realistically priced, and are consequently selling quickly. The properties performing well on the North Shore include moderate to medium priced residential properties presented in reasonable condition, and those in popular school zones. For example Forrest Hill, Milford and Mairangi Bay.” said Whitehead.

“In Auckland City the traditionally sought-after suburbs are performing well. Again, properties within popular school zones and those close to desirable amenities are attracting attention.   General sentiment is that the market has stabilised and people are just getting on with their lives now” said Whitehead. 

“Reported low levels of listings this winter may be prolonged further if vendor sentiment holds true. That is, vendors who can afford it seem to be waiting for a further upturn in the market to realise their price expectations. For those who are listing properties now, we are sensing a much lower degree of desperation than six to twelve months ago.  There are many people actively looking to purchase, but buyers actions continue to have an air of caution about them.” said Whitehead.

“There also seems to be more activity in the re-finance area. Some home owners are prepared to borrow a little more to undertake minor improvements such as decks, re-decorating, or upgrading a bathroom or kitchen. Many owners acknowledge the cost of changing homes and would rather put that money towards adding value to their current dwelling” said Whitehead.

Hamilton

Property values in Hamilton declined by 2.9% over the past year (calculated over the three months ending July 2009 in comparison to the same period last year), a further improvement on the 6.6% annual decline reported in June. The average sale price for the city increased from $337,851 to $344,081.

Mr. Richard Allen of QV Valuations said; “For the fifth consecutive month year-on-year values for Hamilton City recovered slightly. The 3.7% improvement seen in July is further evidence that the residential market in the city continues to stabilise. In fact all four areas in the city experienced healthy improvements”.

“The continued recovery in Hamilton’s declining values confirms that house prices in the city have at least flattened out. Although some areas of the country are showing positive signs, I am still of the opinion that this stabilisation may only be an aberration, at least in Hamilton. I think a lack of demand caused by poor regional economic factors and the reduced dairy payout will put more downward pressure on the residential property market in Hamilton and the Waikato later in the year” Allen said.

Tauranga

Property values in Tauranga declined by 6.6% over the past year (calculated over the three months ending July 2009 in comparison to the same period last year), an improvement on the 8.0% annual decline reported in June. The average sale price for the region decreased from $427,927 to $415,156.

Mr. Shayne Donovan-Grammer of QV Valuations said; “The average sale price has fallen in the Tauranga region which is reflecting what I am seeing at the coal-face. This fall can also be attributed to the bulk of the activity coming in the $350,000 and below price bracket. Although value recoveries have been evident over the last few months in some parts of NZ, this is not the case in Tauranga. Talk of a widespread and continued recovery at this stage I think is premature”.

“In saying this, a lack of stock in some property categories and locations has stabilised values in those areas recently. At the moment the market appears to be finely balanced. It will be interesting to see what direction it will take leading into spring with rising unemployment and subdued dairy payouts” said Donovan-Grammer.

Wellington

Property values in the Wellington region declined by 4.0% over the past year (calculated over the three months ending July 2009 in comparison to the same period last year), a substantial improvement on the 6.5% annual decline reported in June. The average sale price for the region decreased slightly from $430,939 to $429,571.

Kerry Buckeridge of QV Valuations in Wellington said; “Residential property values have moved in a positive direction for the third consecutive month in Wellington. If this is an aberration before another down-turn, it certainly is an extended one. I have noted good attendance at open homes with buyer attention focused on most parts of the market. We have seen an increase in mortgagee sales, but given market sentiment and the current shortage of listings these are often attracting good buyer interest”.

“We have recently noticed a decreased number of valuations being requested out of the residential market. This could possibly be driven by the school holidays and the recent bad weather, so is probably more a seasonal trend. This may give some indication that actual sales activity is slightly more subdued, despite heightened buyer interest” said Buckeridge.

“A significant number of relatively cashed-up expatriates are returning to New Zealand and are all in need of housing. Countering this, and of particular importance in Wellington’s property market, is the effect of public sector restructuring. Already there have been a reasonable number of redundancies and government contractors are getting less work. If people’s incomes are under threat they are less likely to be strong participants in the property market” Buckeridge said.  

“I think most people believe we have seen the worst of the residential market downturn in Wellington, but of course it is impossible to say at this stage. The value recovery experienced thus far has been off the back of some very finely balanced economic forces and a small shift in any of these could change the current trend. The foreseeable future presents a standoff between immigration and unemployment, which could tip the scales either way” said Buckeridge.

Christchurch

Property values in Christchurch declined by 5.5% over the past year (calculated over the three months ending July 2009 in comparison to the same period last year), an improvement on the 7.3% annual decline reported in June. The average sale price for the city increased slightly from $339,962 to $342,993.

Jess Maher of QV Valuations in Christchurch said; “For the fourth consecutive month the rate of annual decline in the Christchurch region’s housing market has recovered slightly. Once again suburban Christchurch has held well, the hill suburbs have shown the greatest recovery and are closely followed by the southwest suburbs”.

“There is a great deal of positive feeling out there in the residential market at present, particularly in the traditional first home buyers market where properties are selling under $350,000. We are hearing from a number of people that it is a good time to be selling property in this price bracket due to a shortage of listings and increased number of buyers. Real estate agents are reporting good results at auctions and multiple offer situations. However, there are still many underlying economic factors such as job security, which are influencing purchaser’s decisions” said Maher.

“It is not unusual in winter for there to be a shortage of listings, as traditionally vendors wait until spring to place their properties on the market. With building consents are still at low levels and net migration rising, it is expected that pressure will come onto existing housing stock. However the effect of this will possibly be mitigated by an expected increase in listings heading into spring” said Maher

Dunedin

Property values in Dunedin decreased by 1.4% over the past year (calculated over the three months ending July 2009 in comparison to the same period last year), a substantial improvement on the 4.5% annual decline reported in June. The average sale price in Dunedin increased slightly from $256,493 to $258,813.

Mr. David Paterson of QV Valuations said; “The month’s figures point to a continued improvement noted in last month’s report, and confirm our predictions earlier this year that the values would move into positive growth later this year in Dunedin. What has been surprising is the speed with which this change has occurred over the last few months”.

“Discussions with local agents indicate there is a shortage of listings, particularly in the upper price brackets. There appears to be plenty of buyers which would indicate that it is now becoming more of a sellers market. The Dunedin market has always been price sensitive and that still appears to be the case today, with correctly priced properties selling quickly” Paterson said.

“While it is good to see some positive trends, there is still concern by some that the improvement we have seen over recent months is not sustainable. One can point to concerns about long term job security, the wider economic factors and international market trends to support these views. It is difficult to predict what might happen over the next few months given the uncertain economic times we are facing. There is however positive sentiment out there which is supported by our statistics. The feeling is that this will continue into spring, as this would be expected in a normal sales cycle” Paterson said.

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