Growth In Property Values Ease

Media release
5 May 2006

Embargoed to 11.59pm Sunday, 7 May 2006

Growth In Property Values Ease

April property statistics released by QV today indicate that nationally, residential property values increased by 13.1% over the past twelve months from May 2005. This is down from the 14.8% reported in March.

“The decrease in the growth rate of the Residential Price Movement reflects a cooling off of the property market in many areas. The most recent activity over the past 2-3 months indicates that prices are beginning to level off, in comparison with the same period in 2005. We expect to see the annual growth in values continue to flatten over the coming months,” says QV spokesperson Blue Hancock.

“Although the national trend is for flattening residential property values, due to a fall in demand pressures, there are still areas where demand remains strong, notably the more affordable areas in our urban centres” said QV spokesperson Blue Hancock.

This months annual figures show the main centres have seen slight falls in the growth rate, with Hamilton growth rates down from 25.1% to 23.9%, Christchurch now 13.8%, Wellington 12.0% and Auckland 8.9%. Dunedin property values remained stable this month at 10.4%, the same level of growth that was reported for the period ending March 2006.

Of the major provincial cities Gisborne 31.2%, Whangarei 25.8%, New Plymouth 13.3% and Invercargill 11.9% reported decreases in growth. Taupo 7.9% and Masterton 21.1% reported slight increases in growth from the 7.8% and 19.1% reported respectively for the twelve months ending March.

ENDS
Main Urban Areas Commentary:

Auckland:

Auckland City property values have shown growth of 8.9% over the past 12 months, down from the 9.4% growth reported in March. The average sale price was $517,054 up from the $510,117 reported in March.

“Although our statistics are showing annual growth of 8.9% across Auckland City, the most recent market activity shows prices are levelling off, but remain in positive territory. We expect Auckland property values to continue to flatten over the coming months” said Glenda Whitehead of QV Valuations.

Waitakere property continues its’ steady growth, with a reported annualised rise of 11.6%. “All other cities in the region continue to have good activity at the lower end of their markets. Valuers are now reporting greater buyer caution, and that vendors need to be realistic in order to achieve sales of properties in the mid to upper price ranges for those cities. Specialist type and waterfront properties, that attract the discretionary dollar, continue to be in demand and in many cases attract premium prices” said Glenda Whitehead of QV Valuations.

Hamilton:

Hamilton residential property values increased by 23.9% over the past 12 months, this was down from 25.1% growth reported to March. The average sales price was $315,883 down on the $316,138 reported for the period ending March.

“Although Hamilton’s growth has been slowing over the past few months, this is the first sign of Hamilton’s average sales price decreasing” says Richard Allen of QV Valuations.

Hamilton suburbs all showed a decrease in growth rate this month with Hamilton South-West being the most affected reporting 27.6% growth down from 30.1%.

Wellington:

Wellington City’s property values have shown growth of 12.0% over the past year, down on the 12.6% reported in February. The average sales price in Wellington City was $426,063 down slightly on $427,960 reported in March.

“The Wellington market appears to be at its peak as indications are that the high level of price increases is starting to ease. Conditions are still very buoyant with a much higher than average number of sales taking place and properties are selling much faster than normal. The indication is that this will ease slowly” says Max Meyers of QV Valuations.

Other Wellington cities that showed strong growth were Upper Hutt with growth of 19.9%; Lower Hutt 15.1% and Porirua growth of 15.0% over the past 12 months.

Christchurch:

Christchurch property values grew 13.8% over the past 12 months, down on the 15.9% reported in March. The average sales price for the city was $317,944, down from $320,549 reported in March.

“Overall market sentiment is that prices are beginning to stabilise, the growth rate and average sales prices are levelling out, the growth rate is the lowest it has been in a year. Purchasers in the market are using their improved position to negotiate strongly on price” said Mark Dow of QV Valuations.

Dunedin:

Dunedin residential property values have grown by 10.4% over the past 12 months, equal with the 10.4% reported for the year ending March 2006. The average house price of $242,050 decreased slightly from $250,293 reported in the year ended March 2006.

“The Dunedin market hasn’t really changed significantly from last month and the figures reflect that. There has been a drop in the average sale price which is more a reflection of a lack of sales in the higher price bracket compared with previous periods than a drop off in values. The lack of sales in the higher price bracket may reflect reluctance on the part of the vendors to meet the market price.” says David Paterson of QV Valuations.

QV RESIDENTIAL PRICE MOVEMENT REPORT - as at April 2006

City / Region April 2006 Property Value Growth % March 2006 Property Value Growth % April 2006 Average sale price
(Annual % Change) (Annual % Change)
Far North 17.2 20.8 $290,802
Whangarei 25.8 29.9 $308,748
Kaipara 29.3 27.9 $254,814
Rodney 8.8 9 $444,885
- Hibiscus Coast 8.8 8.3 $445,875
- Rodney (North) 9.1 9.9 $443,359
North Shore City (A) # 11.0 13.1 $495,871
- Coastal North Shore 10.8 13.5 $562,751
- North Shore Onewa 11.3 13.6 $406,027
- North Harbour 7.8 7.5 $512,749
Waitakere City (A) # 11.6 12.2 $355,126
Auckland City (A) # 8.9 9.4 $517,054
- Auckland City (Central) 3.4 3.5 $481,896
- Auckland City (East) 9.7 10.3 $635,772
- Auckland City (South) 9.2 9.9 $453,035
- Islands 23.9 24.1 $493,494
Manukau City (A) # 14.8 14.5 $362,469
- Manukau East 12.6 12.1 $476,991
- Manukau Central 15.4 16.5 $293,021
- Manukau North West 18.5 17.2 $314,591
Papakura (A) # 14.9 16.5 $306,227
Franklin 16.0 15.2 $336,226
Thames Coromandel 9.1 11 $434,261
Hauraki 23.3 26.1 $212,250
Waikato 28.5 29.7 $241,215
Matamata Piako 31.1 34 $241,826
Hamilton # 23.9 25.1 $315,883
- Hamilton North East 21.0 22.1 $403,624
- Central City/North West 24.3 25.4 $298,845
- Hamilton South East 24.0 24.8 $296,613
- Hamilton South West 27.6 30.1 $273,673
Waipa 26.5 29.1 $290,805
Otorohanga 34.9 41.4 $174,065
South Waikato 32.1 34.3 $114,073
Waitomo 39.1 44 $135,644
Taupo 7.9 7.8 $337,663
Western Bay of Plenty 18.5 18.5 $360,532
Tauranga # 7.6 11.3 $384,593
Rotorua 31.6 31.5 $228,535
Whakatane 18.6 23.9 $318,180
Kawerau 28.1 31.7 $121,900
Opotiki 11.0 18.3 $202,821
Gisborne 31.2 35.2 $246,417
Wairoa 42.7 38.5 $111,560
Hastings 11.3 12 $272,744
Napier City # 11.1 13.6 $314,062
Central Hawkes Bay 14.6 18.2 $173,526
New Plymouth 13.3 14.7 $286,648
Stratford 20.6 25.8 $261,667
South Taranaki 19.8 26.7 $154,130
Ruapehu 50.3 48 $126,449
Wanganui 24.8 30.2 $171,697
Rangitikei 30.4 34.3 $133,308
Manawatu 18.7 22.4 $203,379
Palmerston North # 19.1 20.9 $252,382
Tararua 25.4 30 $125,148
Horowhenua 20.5 21.3 $184,090
Kapiti Coast 16.2 17.4 $303,148
Porirua (W) # 15.0 14.6 $331,876
Upper Hutt (W) # 19.9 19.4 $282,924
Lower Hutt (W) # 15.1 14.9 $284,615
Wellington City (W) # 12.0 12.6 $426,063
- Wellington City & Southern 12.2 12.4 $425,690
- Eastern Suburbs 10.5 10.8 $476,019
- North Wellington 14.4 14.7 $383,226
- Western Suburbs 10.6 11.8 $468,126
Masterton 21.1 19.1 $206,945
Carterton 21.0 18.4 $227,646
South Wairarapa 14.6 17 $220,546
Tasman 10.0 9.3 $342,786
Nelson # 4.0 4.5 $311,384
Marlborough 11.5 14 $298,054
Kaikoura 10.4 8.9 $359,222
Buller 18.9 22.2 $153,093
Grey 24.6 20.6 $175,999
Westland 30.0 23.7 $173,526
Hurunui 15.2 14.6 $252,509
Waimakariri 15.0 16.7 $286,169
Christchurch City # 13.8 15.9 $317,944
- East 15.5 17.2 $260,819
- Hills 12.1 13.5 $436,880
- Central City and North 12.1 14.3 $371,426
- Southwest 15.6 18.4 $293,754
Banks Peninsula 23.1 22.3 $365,738
Selwyn 16.6 N/A $293,870
Ashburton 26.2 N/A $206,772
Timaru 17.3 20.1 $200,040
MacKenzie 30.9 27.3 $210,000
Waimate 19.9 21.8 $150,540
Waitaki 8.7 10.2 $165,389
Central Otago 9.2 11.1 $258,380
Queenstown Lakes 8.5 12.2 $490,661
Dunedin # 10.4 10.4 $242,050
- Central/Northern City 7.9 8.3 $253,725
- Peninsular/Coastal Dunedin 12.1 10.5 $205,887
- Southern City 9.8 9.4 $232,470
- Taieri 14.9 15.1 $246,138
Clutha 29.7 30.1 $149,880
Southland 6.8 10.2 $136,981
Gore 5.8 8.2 $116,676
Invercargill # 11.9 13.9 $139,617

Total NZ 13.1 14.8 $324,141

Auckland Region (A) 11 11.8 $427,103
Wellington Region (W) 13.7 13.9 $351,068
Main Urban Areas # 11.8 12.8 $360,127

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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