Residential market remains buoyant

Media release
9 December 2005

Residential market remains buoyant

QV’s November property statistics indicate that residential property values increased 15% annually, up from 14.5% growth reported in October.

The property value growth rate for November is the highest growth rate reported by QV this year, and is a turnaround from the slowdown that occurred in October, where growth was down from 14.9% in September.

“15% is a significant level of annual growth, and is an indication that the market is remaining buoyant despite thoughts that the market may have been beginning to level out” says QV spokesperson Blue Hancock.

In most areas property value growth rates were above those reported in October, including main centres Hamilton (27.7%), Christchurch (19.3%), and Wellington (12%). The growth rate in Dunedin eased to 13.9% from 16.2% in October, while Auckland City property values grew a comparatively low 4%.

Wanganui continues to be one of the leading centres in the country with property value growth of 38.3%, while Whangarei (34.5%), Gisborne (28.4%) and Rotorua (27.7%) are continuing the trend of areas with an availability of affordable residential property experiencing the highest value growth levels.

ENDS

Main Urban Areas Commentary:

Auckland:

Auckland City property values increased 4% over the 12 months to November, with the average price of $475,841. While the overall growth rate for Auckland City can be considered marginal, there are still areas within the Auckland City market that are remaining buoyant, most notably in the Southern Suburbs (8.5% growth, average price $420,390).

In contrast to Auckland City, close neighbours Manukau (13.9%), North Shore (13.6%), and Waitakere (12.2%) continue to experience property value growth rates closer to the national average, illustrating that there remains strong growth in the greater Auckland market.

Hamilton:

Property values in Hamilton grew 27.7% over the 12 months to November, making Hamilton one of the country’s leading property hotspots. All areas of the Hamilton market are remaining buoyant; South West (30.9%), Central City/North West (28%), Hamilton South East (27.7%), North East (25.1%).
Although the growth rate in Hamilton residential values has increased substantially this year, there is anecdotal evidence that some investors may be leaving the market which may result in slowing. It is becoming increasingly difficult to rent properties and in some instances landlords are being forced to reduce rentals in order to attract and retain tenants.
Wellington:

Property values were up 12% in Wellington City, the highest growth level since the monthly statistics were first reported by QV in January.

In the Kapiti (15.5%) and North Wellington (14.3%) areas the market has accelerated which appears a reflection of the demand for lower priced homes.

Residential properties in Lower Hutt grew in value by 13.2% with an average price of $277,366, making Lower Hutt the only area in the region to have noticeable easing in both the average price and growth rate from the statistics reported in October.

Christchurch:

Property values in Christchurch were up 19.3%, consistent with figures reported for the area in previous months, indicating that the market appears to be in a holding pattern at the moment. Reports from valuers also indicate that some vendors have to revise asking prices after little or no interest from purchasers.

Although the average price of residential property in Central City/Northern areas ($437,237) and Hills areas of Christchurch ($344,262) vary, the growth in property values in these areas was identical at 17.7%.
Dunedin:

Dunedin City property values grew 13.9% over the 12 months to November. Although this growth rate compares well with other main centres, Dunedin property value growth has slowed from over 20% growth reported earlier in the year.

Residential properties in Southern Dunedin represent the most affordable buying in the city, with an average price of $229,046 and growth of 20.7%, while properties in Central and Northern areas of the city grew in value by 11.7% with a higher average price of $250,493.

QV RESIDENTIAL PRICE MOVEMENT REPORT - as at November 2005

City / Region / November 2005 Property Value Growth % (Annual % change) / October 2005 Property Value Growth % (Annual % change) / November 2005 Average sale price

Far North / 28.3 / 38.6 / 264,135
Whangarei / 34.5 / 30.9 / 268,098
Kaipara / 32.8 / 18.4 / 236,134
Rodney / 10.1 / 13.4 / 435,514
- Hibiscus Coast / 10.2 / 13.2 / 445,541
- Rodney (North) / 10.8 / 14.1 / 418,411
North Shore City (A) # / 13.6 / 12.7 / 472,308
- Coastal North Shore / 13.5 / 12.6 / 531,777
- North Shore Onewa / 13.1 / 13 / 393,093
- North Harbour / 10 / 8 / 485,969
Waitakere City (A) # / 12.2 / 12.4 / 344,666
Auckland City (A) # / 4 / 4.9 / 475,541
- Auckland City (Central) / 1 / 3.6 / 441,759
- Auckland City (East) / 3.1 / 2.9 / 584,837
- Auckland City (South) / 8.5 / 8.9 / 420,390
- Islands / -1.7 / 5.4 / 460,112
Manukau City (A) # / 13.9 / 13.2 / 343,002
- Manukau East / 10.4 / 9.1 / 448,851
- Manukau Central / 17.1 / 16.2 / 287,893
- Manukau North West / 17.3 / 17.2 / 298,774
Papakura (A) # / 17.5 / 17.7 / 295,973
Franklin / 23.9 / 19.7 / 301,827
Thames Coromandel / 13 / 14.6 / 408,433
Hauraki / 33.9 / N/A / 204,378
Waikato / 26.4 / 23 / 214,883
Matamata Piako / 35.9 / 38.9 / 223,663
Hamilton # / 27.7 / 27.1 / 293,520
- Hamilton North East / 25.1 / 24.6 / 361,453
- Central City/North West / 28 / 28.9 / 279,330
- Hamilton South East / 27.7 / 24.9 / 273,070
- Hamilton South West / 30.9 / 31.7 / 270,488
Waipa / 28.1 / 27.8 / 264,293
Otorohanga / 54.1 / 64.3 / 207,179
South Waikato / 44.8 / 44.1 / 102,645
Waitomo / 30.7 / 29.7 / 112,745
Taupo / 13.1 / 12.1 / 383,226
Western Bay of Plenty / 29.2 / 23.3 / 378,555
Tauranga # / 6.8 / 8.9 / 365,861
Rotorua / 27.7 / 25.7 / 216,430
Whakatane / 42.5 / 39.6 / 259,899
Kawerau / 42.5 / 38.3 / 113,689
Opotiki / 70.8 / 71.7 / 178,000
Gisborne / 28.4 / 27.7 / 208,835
Wairoa / 51.6 / 33.4 / 104,826
Hastings / 19.9 / 21.2 / 275,016
Napier City # / 13.3 / 14.5 / 309,421
Central Hawkes Bay / 30.9 / 25.5 / 202,555
New Plymouth / 24.9 / 29.2 / 282,769
Stratford / 38.4 / 40.4 / 137,960
South Taranaki / 37.7 / 36.8 / 137,130
Ruapehu / 43.6 / 43.1 / 111,613
Wanganui / 38.3 / 35 / 154,234
Rangitikei / 37.5 / 34.8 / 126,970
Manawatu / 27.3 / 24.5 / 186,216
Palmerston North # / 18.3 / 18.7 / 237,937
Tararua / 20.8 / 26.8 / 105,063
Horowhenua / 26.8 / 21.1 / 168,338
Kapiti Coast / 16.5 / 15.5 / 267,335
Porirua (W) # / 15.5 / 14 / 300,406
Upper Hutt (W) # / 15.6 / 16.8 / 261,780
Lower Hutt (W) # / 13.2 / 14.1 / 277,366
Wellington City (W) # / 12 / 11.3 / 410,412
- Wellington City & Southern Suburbs / 10.1 / 8.6 / 401,387
- Eastern Suburbs / 12.4 / 12.6 / 452,632
- North Wellington / 14.3 / 13.8 / 373,937
- Western Suburbs / 11.3 / 9.6 / 465,979
Masterton / 18.2 / 13.5 / 191,885
Carterton / 11.8 / 19 / 175,894
South Wairarapa / 19.9 / 16.2 / 218,614
Tasman / 5.9 / 5.2 / 320,070
Nelson # / 3.9 / 3.6 / 308,418
Marlborough / 14.9 / 14.1 / 270,692
Kaikoura / 8.2 / N/A / 278,273
Buller / 25.7 / 17.1 / 138,611
Grey / 29.6 / 32.1 / 159,716
Westland / 37.5 / 30.8 / 198,924
Hurunui / 22.4 / 23.1 / 223,936
Waimakariri / 19.8 / 19 / 284,129
Christchurch City # / 19.3 / 18.1 / 299,154
- East / 20.9 / 18.7 / 252,087
- Hills / 17.7 / 16.3 / 437,237
- Central City and North / 17.7 / 16.9 / 344,262
- Southwest / 20.7 / 20.1 / 281,897
Banks Peninsula / 16.4 / 13.3 / 340,220
Selwyn / N/A / N/A / N/A
Ashburton / N/A / N/A / N/A
Timaru / 23.6 / 21.1 / 181,368
MacKenzie / 12.7 / 20.2 / 187,780
Waimate / 13.8 / 17.4 / 117,125
Waitaki / 10.5 / 12.2 / 150,453
Central Otago / 13.2 / 18.9 / 258,846
Queenstown Lakes / 12.8 / 13.6 / 497,731
Dunedin # / 13.9 / 16.2 / 243,774
- Central/Northern City / 11.7 / 11.5 / 250,493
- Peninsular/Coastal Dunedin / 13.2 / 15.8 / 236,966
- Southern City / 17.5 / 20.7 / 229,046
- Taieri / 16.7 / 21 / 257,412
Clutha / 41.1 / 23.5 / 136,996
Southland / 16.4 / 17.3 / 143,006
Gore / 8.3 / 15.5 / 104,005
Invercargill # / 10.1 / 9.3 / 144,136

Total NZ / 15 / 14.5 / 315,089

Auckland Region (A) / 9.1 / 8.2 / 409,213
Wellington Region (W) / 13.1 / 12.7 / 345,342
Main Urban Areas # / 11.9 / 11.3 / 353,286

Notes on the above data:

If a City or Region is shown in italics with an * this indicates the values for this area may not be statistically accurate as they are based on a low volume of sales.
N/A - indicates that either there were too few sales to report a Property Value Growth % or that the data for this period was unavailable

The information included in the above table is calculated based on the sales data entered into QV's system for the previous 3 month period. For example, information for the period ending June will be calculated based on sales entered between April 1 and June 30.

Property Value Growth is the annual % change in residential property values, calculated using QV's House Price Index methodology. The residential sales entered into QV's system for the previous 3 month period are compared to the same period of the previous year to identify the annual percentage change in residential property values. Average sale prices are calculated based on residential sales entered into QV's system for the previous 3 month period.

Residential Price Movement
Questions and Answers:

The following information is provided as background to the Residential Price Movement statistics.

1. What is the Residential Price Movement Report?

The Residential Price Movement Report is a new set of residential property statistics that provides an estimate of the change in residential property values over the previous 12 months for areas throughout New Zealand. Residential sales compiled by QV for the previous 3 months are compared to the same period of the previous year to identify the annual percentage change in residential property values. The residential sales included are for residential houses, apartments, flats, home and income properties, and houses converted to flats.

2. Why has the Residential Price Movement Report been developed?

The Residential Price Movement Report has been developed to provide a timely indicator of residential property value movement, using the latest residential sales data compiled by QV for the previous 3 month period.

QV has previously only released property statistics quarterly. QV’s measure of price movement has been the Quarterly House Price Index (QHPI). The QHPI only includes sales that have been notified to the Territorial Authority that sold within the quarter. As sales of properties can sometimes take 4-6 weeks to settle, the QHPI is released after an extended period to incorporate as much sales activity from the quarter, which results in increased statistical accuracy, but also a less timely output.

As the Residential Price Movement Report uses the sales compiled by QV over a 3 month period, rather than the sales that necessarily sold within that period, the Residential Price Movement Report can be released on a more frequent basis, providing a timelier indicator of property value movement. The Residential Price Movement Report also includes sales activity in other residential property sectors including apartments and flats.

3. How frequently will the Residential Price Movement Report be released?

The Residential Price Movement Report data will be available to the media on a monthly basis. It will be released to the media for publication on either the second or third Monday of each month.

4. How current is the Residential Price Movement data?

The data contained in the Residential Price Movement Report is based on the residential sales compiled by QV for the previous 3 month period.

For example, the Residential Price Movement Report as at January 2005 will include sales compiled by QV up until 31 January 2005 and include sales compiled since 1 November 2004.

5. Why does the Residential Price Movement Report include sales compiled by QV over a 3 month period?

Sales are included over a 3 month period rather than a single month to ensure that there are sufficient sales volumes to calculate statistically accurate property value growth.

6. How is the Residential Price Movement data calculated?

The Residential Price Movement Report includes two indicators of property value; the property value growth, and average sales prices.

Property Value Growth
The Property Value Growth uses QV’s House Price Index methodology, which generates a residential index for each area by recognising the sales price of each property sold compared to its capital value. This ensures the index provides a measure of change in property values, without fluctuations caused by higher sales volumes in one or more property sectors (e.g. high volumes of apartment sales or investment properties).

Residential sales compiled by QV for the previous 3 month period are compared to the sales compiled by QV for the same period the previous year to identify the annual percentage change in property values.

Average Sales Prices
The Average Sales Prices calculated in the Residential Price Movement Report are based on residential sales compiled by QV for the previous 3 month period.

7. Does property value growth reflect a change in average sales prices?

No. Property Value Growth does not reflect a change in average sales prices, which are only given to enable a comparison of sale prices for one month compared to the last. Property Value Growth uses QV’s House Price Index methodology to generate a residential index for each area by recognising the sales price of each property sold compared to its capital value.

8. Why does QV recommend using the Property Value Growth rather than Average Sales Prices to verify the change in property values over time?

Average Sales Prices are only provided in the Residential Price Movement Report as a broad indicator of property values in an area to assist comparisons between areas. QV recommends referring to the property value growth to verify change in property values over time, rather than the average sales price, as the average sales prices can be impacted by the types and categories of properties selling, or low volumes of property sales.

9. When was the Residential Price Movement Report first released?

The Residential Price Movement Report was first released for the period ending January 31 2005. The QV Quarterly House Price Index, which measures the movement of house values over time, is available back until 1989. QV is also able to produce statistics using its database going back to 1985 for most areas.

10. Why does the Residential Price Movement Report provide an ‘estimate of property value’ only?

Data in the Residential Price Movement Report provides estimates only of property value, and should not be considered ‘final’ statistics, as not all sales for the 3 month period will be included due to the time the data is released. This is because some sales within the 3 month period will not have been notified to the Territorial Authority in time for inclusion in the Residential Price Movement Report data. Notification of the sale to the Territorial Authority does not occur until after the sale has been settled and documents forwarded by the solicitor. This generally introduces a lag of 4 to 6 weeks before the Territorial Authority records the sale.

QV produces final property statistics which are released after an extended period to incorporate a greater level of sales activity, resulting in a more statistically accurate output. Final property statistics, including the QV Quarterly House Price Index, can be purchased online at www.qv.co.nz.

11. Why do some Territorial Authorities show ‘N/A’ (Not Available)?

Territorial authorities may show ‘N/A’ if there is insufficient data available at the time of publication to produce statistically accurate outputs. This may occur when there has been very low sales activity in an area, or alternatively when QV has not been supplied sufficient residential sales volumes by a Territorial Authority for a particular period.

12. Why does QV caution against using statistics with low volumes of sales?

Statistics based on low sales volumes should be used with caution, as low volumes of sales are insufficient to create statistically accurate outputs. Any statistics calculated based on sales volumes of less than 50 sales appear in Italics in the Residential Price Movement Report data.

13. How are the regions and city areas defined?

Property Value Growth statistics are provided for each council area throughout New Zealand. Five main urban areas (Auckland, Hamilton, Wellington, Christchurch, and Dunedin) also have property value growth statistics available for areas within the cities. These city areas have been defined through consultation with QV Valuers that have local knowledge of each area.

Property Value Growth Statistics are not provided for individual suburbs, as most suburbs have insufficient sales volumes to ensure statistically accurate property value growth calculations.

14. Where does QV source the property data?

QV maintains a national database on Property Information that it creates by sourcing updates of the District Valuation Roll from all NZ Territorial Local Authorities/councils.

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