Residential Property Values Grow 12.4%

Media release
9 June 2006

Embargoed to 11.59pm Sunday, 11 June 2006

Residential Property Values Grow 12.4%

QV’s May property statistics released today indicate that nationally, residential property values increased by 12.4% over the past twelve months. This is down from the 13.1% reported in April. The average New Zealand sale price was $327,779.

“The current market trend is showing a flattening of property values; it is the fourth consecutive month that a decrease in growth has been reported. Growth is back at the levels reported in May 2005. The most recent market activity suggests there is no longer the urgent pressure on buyers and prices are stabilising. This trend is expected to continue throughout the winter months” said QV spokesperson Blue Hancock.

The main centres have again seen slight decreases in the growth rate, with Auckland growth rates down from 8.9% to 7.6%, Hamilton down to 21.5%, Christchurch 12.7%, and Dunedin 8.2%. Wellington residential property values remained stable this month at 11.8%.

Of the major provincial cities decreases in growth were reported for Gisborne 28.7%, Whangarei 24.3% and New Plymouth 11.0%. Invercargill reported strong growth of 15.5% up from 11.9% growth reported for the period ending April 2006. Masterton residential property values remained stable with 21.9% growth.

ENDS

Main Urban Areas Commentary:

Auckland:

Auckland City property values have shown growth of 7.6% over the past 12 months, down from the 8.9% growth reported in April. The average sale price was $517,455.

Across all Auckland metropolitan areas reduced growth levels are showing compared to those reported last year. In May 2005 the annual growth levels ranged from 8.6% in North Shore, 8.7% Auckland through to 14.1% and 15.8% in Rodney and Papakura. Franklin was considered an outlier at 23%; a later starter with ground to make up. A year on the range has tightened with Auckland’s annual growth rate now at 7.6%, Rodney at 8.7%, North Shore 9.6%, Manukau at 14.1%, with Franklin still performing well, but now down to 16.9%.

“Six months ago we saw growth rates easing off, but average house prices were still increasing. This reflected the push from the lower end of the property market. We are now also seeing average house prices easing marginally, reflecting that the easing in growth rates is now across the board” said Glenda Whitehead of QV Valuations.

“Vendors who are realistic in their pricing are achieving sales within a marketing period of four to twelve weeks. Marketing periods are now extending in some areas, as buyers are now being more discerning than they have been in the recent past. In general the market has lost some of its buyer urgency, but there are no signs of oversupply in the market” said Glenda Whitehead.

Hamilton:

Hamilton residential property values increased by 21.5% over the past 12 months, this was down from 23.9% growth reported to April. The average sales price for Hamilton City was $316,835.

“Although again this month Hamilton residential properties have seen a slight decrease in the growth rate the average sale price has increased to the highest point yet up $952 on the $315,883 reported for the year ended April 2006” says Richard Allen of QV Valuations.

Wellington:

Wellington City’s property values have shown growth of 11.8% over the past year, down marginally on the 12.0% reported in April. The average sales price in Wellington City was $429,432.

“The Hutt Valley is experiencing strong growth in property values, particularly Upper Hutt at over 20.0% growth. Most other parts of Wellington are following the national trend of slowing growth rates” says Max Meyers of QV Valuations.

“The Wellington market remains strong with a higher than average level of sales activity and fast selling times. However anecdotal evidence suggests that the pressure from buyers is easing. This trend is expected to become more evident particularly in the latter part of the year” says Max Meyers.

Christchurch:

Christchurch property values grew 12.7% over the past 12 months, down on the 13.8% reported in April. The average sales price for the city was $313,388.

“Although property values are 12.0% higher than this time last year, the fact the average sale price for Christchurch City has declined for the second consecutive month and the average length of time to sell appears to be lengthening, suggests increases in value in coming months is unlikely. Although the average sale price has been decreasing for residential properties vacant land prices are continuing to hold up well” said Mark Dow of QV Valuations.

Dunedin:

Dunedin residential property values have grown by 8.2% over the past 12 months, down from the 10.4% increase reported for the year ending April 2006. The average sale price was $245,908.

“The figures for Dunedin City show a steady slowdown in the growth of property values over the last twelve months. This reduction is consistent across most areas of the city. These results are pretty much as predicted, reflecting the impact of rising interest rates and the general economic outlook over the medium term” says David Paterson of QV Valuations.

“There is still good demand for well presented properties in all price ranges. There is also a good supply of properties on the market and vendors prepared to meet the market will sell reasonably quickly” says David Paterson.

QV RESIDENTIAL PRICE MOVEMENT REPORT - as at May 2006

City / Region / May 2006 Property Value Growth % (Annual % Change) / April 2006 Property Value Growth % (Annual % Change) / May 2006 Average sale price

Far North 14.4 17.2 $277,812
Whangarei 24.3 25.8 $313,162
Kaipara 20.8 29.3 $266,967
Rodney 8.7 8.8 $441,174
- Hibiscus Coast 8.2 8.8 $443,614
- Rodney (North) 10.3 9.1 $436,658
North Shore City (A) # 9.6 11.0 $491,174
- Coastal North Shore 9.5 10.8 $559,239
- North Shore Onewa 8.6 11.3 $404,744
- North Harbour 7.9 7.8 $497,592
Waitakere City (A) # 10.4 11.6 $354,747
Auckland City (A) # 7.6 8.9 $517,455
- Auckland City (Central) 3.7 3.4 $478,660
- Auckland City (East) 6.4 9.7 $654,711
- Auckland City (South) 8.5 9.2 $437,623
- Islands 23.8 23.9 $545,595
Manukau City (A) # 14.1 14.8 $366,440
- Manukau East 11.5 12.6 $481,558
- Manukau Central 15 15.4 $291,954
- Manukau North West 18.2 18.5 $319,770
Papakura (A) # 12.5 14.9 $307,397
Franklin 16.9 16.0 $329,699
Thames Coromandel 5.8 9.1 $425,167
Hauraki 21.7 23.3 $221,934
Waikato 24.3 28.5 $238,490
Matamata Piako 26.8 31.1 $245,774
Hamilton # 21.5 23.9 $316,835
- Hamilton North East 18.8 21.0 $401,434
- Central City/North West 22.9 24.3 $302,135
- Hamilton South East 20 24.0 $297,464
- Hamilton South West 24.1 27.6 $279,026
Waipa 23.8 26.5 $293,211
Otorohanga 33.2 34.9 $178,707
South Waikato 30.4 32.1 $116,341
Waitomo 40.4 39.1 $141,786
Taupo 8.3 7.9 $343,221
Western Bay of Plenty 17.8 18.5 $372,287
Tauranga # 6.9 7.6 $390,657
Rotorua 28.7 31.6 $226,649
Whakatane 15.4 18.6 $296,426
Kawerau 28.3 28.1 $126,974
Opotiki 12.1 11.0 $186,540
Gisborne 28.7 31.2 $245,350
Wairoa 24.2 42.7 $110,258
Hastings 11.9 11.3 $275,807
Napier City # 10.3 11.1 $315,494
Central Hawkes Bay 13.8 14.6 $193,458
New Plymouth 11 13.3 $281,950
Stratford N/A 20.6 N/A
South Taranaki 19.8 19.8 $152,290
Ruapehu 46.4 50.3 $125,523
Wanganui 21.5 24.8 $183,435
Rangitikei 29.9 30.4 $130,599
Manawatu 15.8 18.7 $199,728
Palmerston North # 17.5 19.1 $252,204
Tararua 25.6 25.4 $130,833
Horowhenua 19.6 20.5 $186,002
Kapiti Coast 14.9 16.2 $302,227
Porirua (W) # 12.4 15.0 $341,769
Upper Hutt (W) # 20.3 19.9 $280,048
Lower Hutt (W) # 16.2 15.1 $288,258
Wellington City (W) # 11.8 12.0 $429,432
- Wellington City & Southern 11.1 12.2 $423,036
- Eastern Suburbs 9.6 10.5 $499,044
- North Wellington 14.4 14.4 $388,973
- Western Suburbs 11.5 10.6 $460,522
Masterton 21.9 21.1 $211,507
Carterton 19.1 21.0 $227,854
South Wairarapa 11.9 14.6 $222,268
Tasman 6.8 10.0 $333,230
Nelson # 3.5 4.0 $337,631
Marlborough 10.8 11.5 $311,810
Kaikoura 16.1 10.4 $370,161
Buller 19.5 18.9 $144,321
Grey 24.6 24.6 $180,428
Westland 28 30.0 $183,733
Hurunui 8.8 15.2 $266,945
Waimakariri 11.8 15.0 $277,427
Christchurch City # 12.7 13.8 $313,388
- East 13.2 15.5 $265,847
- Hills 11.3 12.1 $425,823
- Central City and North 11.8 12.1 $359,145
- Southwest 13.8 15.6 $290,370
Banks Peninsula 23.9 23.1 $348,695
Selwyn 16.4 16.6 $302,730
Ashburton 26.2 26.2 $211,456
Timaru 13.5 17.3 $205,611
MacKenzie 26.9 30.9 $227,984
Waimate 13.6 19.9 $137,983
Waitaki 7.9 8.7 $168,588
Central Otago 7.8 9.2 $248,797
Queenstown Lakes 5.5 8.5 $500,491
Dunedin # 8.2 10.4 $245,908
- Central/Northern City 5.4 7.9 $256,266
- Peninsular/Coastal Dunedin 10.1 12.1 $202,356
- Southern City 7.7 9.8 $232,543
- Taieri 13.1 14.9 $260,892
Clutha 28.3 29.7 $145,577
Southland 4.4 6.8 $135,033
Gore 7 5.8 $111,954
Invercargill # 15.5 11.9 $144,563

Total NZ 12.4 13.1 $327,779

Auckland Region (A) 9.8 11 $434,349
Wellington Region (W) 13.6 13.7 $363,741
Main Urban Areas # 11.2 11.8 $365,460

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.

ENDS

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