Property values continue to stabilise
By Jonno Ingerson
According to the QV indices for April, residential property values remain relatively stable at a national level. Nationwide, property values have now been relatively stable for several months after falling slightly throughout most of 2010. Values are now 1.9 percent lower than the same time last year, and 5.8 percent below the market peak of late 2007.
The levelling of nationwide values was initially due to a flattening of values in the Auckland market, but there are now increasing signs of values stabilising in many other areas also.
In the Auckland area values have moved within a narrow band for most of the last 18 months. In recent months values have been slightly variable, but there is little evidence at this stage of values moving significantly up or down. Currently values in Auckland are 0.5 percent below the same time last year.
Values in Hamilton are 3.5 percent below the same time last year, but in recent months values appear to be flattening off. In Tauranga values are 1.7 percent below last year, but also appear to be flattening in recent months.
The Wellington area is 3.4 percent below last year, with most of this drop coming in 2010, while over the past six months values have been moving within a narrow band. Values in Dunedin have dropped more over the past year than the other main centres, but may also be stabilising in recent months.
There was an increase in sales activity in March and the first half of April, but this appears to have dropped away following the Easter and school holiday break. Sales activity typically tends to slow from now through until spring.
Market sentiment remains patchy with some areas lacking quality listings to satisfy buyer demand, while other areas have little buyer demand despite plenty of houses for sale. In general properties with desirable attributes, or those that represent good value, are still selling well.
There has been a significant slow down is sales activity in Christchurch since the February earthquake, and this lack of sales means that we have not generated an index for Christchurch. Local valuers are seeing plenty of interest in quality properties in relatively unaffected areas, and prices have been generally holding. There is still a great deal of uncertainty in the market, particularly driven by concerns over job security.
Despite values levelling in recent months in many provincial areas, none currently have values above the same time last year. This recent levelling of values, coupled with declining values last year, means that the gap between this year and last year is closing in many areas. Whangarei (-5.2), Gisborne (-4.6), New Plymouth (-4.5) Palmerston North (-3.7) and Invercargill (-3.9) have the greatest gap compared to last year. Rotorua (-1.0), Hastings (-1.4), Napier and Wanganui (-2.4) and Queenstown Lakes (-1.3) all have values slightly below last year. In Nelson values have been relatively stable since January 2010 and as a result the gap between last year and this year is only -0.7 percent.
Regional round up
QV’s Residential Price Index for April shows property values have decreased by 0.5 percent during the past year in the Auckland region. But values now appear to be stabilising in a narrow band.
Glenda Whitehead of QV Valuation says sales activity in recent months has picked up.
“This turnover of properties has not necessarily resulted in price rises across all areas. We are seeing pockets of the market that are reacting positively to quality new listings, however, in many other areas we continue to see strong caution exercised by purchasers.
“Feedback from buyers has indicated that they are willing to put in bids or offers, but will not move beyond their agreed value limits. In some cases those limits are imposed by their banks lending criteria, with others setting their own limits based on level of debt they are willing service,” Whitehead says.
“This continued caution and control over debt levels provides some reasoning behind the stability of values in the Auckland region. While we have seen some fluctuations of values, when we compare it on an annual basis, we see overall stability for the past year to 18 months. That is very moderate. Rises have been followed by gentle easing in months that follow, and we are generally back to where we started.
“There is no doubt the market is now pricing the quality of improvements and quality of locality. This was not done at the height of the market and lead to over pricing in some areas.
“It is perhaps these areas that are correcting to their true levels, which are holding the overall values down. While quality areas continue to perform well and values gradually rise. Once the market has re-priced in all areas we should see the overall market move forward.”
She says listing levels appear to remain subdued as vendors in many areas consider it is not yet a good time to sell, continuing the wait and see approach.
“This is frustrating buyers who have been looking for a long period, and not finding properties that meet their discerning criteria. We sense this in some areas of the market, typically within the suburbs close to the Auckland CBD.”
The average sales price for the Auckland region in April was $535,161.
QV’s Residential Price Index for April shows that property values have decreased by 3.5 percent during the past year in Hamilton. Values have continued to trend downwards. The average sales price for Hamilton in April was $339,039.
QV’s Residential Price Index for April shows that property values have decreased by 1.7 percent during the past year in Tauranga. Values appear to be stabilisinig in recent months. The average sales price for Tauranga in April was $399,358.
QV’s Residential Price Index for April shows that property values in the Wellington region have decreased by 3.4 percent during the past year. Values have moved within a narrow band for the last few months, having declined slightly since January after increasing slightly in late 2010. The average sales price for Wellington in April was $468,675.
The significant slowdown in the number of sales, and the delays in the overall sales process in Christchurch following the 22 February earthquake mean that the QV residential price index cannot yet be used to measure the change in property values.
QV’s Residential Price Index for April shows that property values in Dunedin have decreased by 4.2 percent. Values have continued to generally trend downward. The average sales price for Dunedin in April was $272,735.