Property market continues to strengthen

Media release
13 April 2007

Property market continues to strengthen

QV’s March statistics for the residential property market report a 9.8% growth in national property values over the past year (calculated over the three months ending March 2007 in comparison to the same period last year). The growth rate increased from 9.3% reported in February. Over this period, the average sale price for New Zealand properties was $363,188.

“The residential market is again showing strong signs on the back of buoyant demand,” said QV spokesperson Mark Dow. “General economic confidence is high and the employment picture is positive with low unemployment figures. Buyers appear to continue to show confidence in the market and are willing to pay higher prices.”

The property values in the main urban centres continue to strengthen with Auckland City up 5.9%, Wellington City 12%, Christchurch 10.7% and Dunedin 7.3%. Hamilton’s property values grew at 12.2%, the same rate as recorded last month.

Of the provincial cities, increases in growth rates were recorded in Porirua 14.1%, Palmerston North 13.1%, Nelson 10.1% and New Plymouth 9.9%. Annual growth eased slightly in Wanganui 13.8%, Rotorua 11.8%, Queenstown 4.6%, and Hastings 3.9%.

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Main Urban Areas Commentary:

Auckland:
Property values in the Auckland region grew 7.5% (calculated over the three months ending March 2007 in comparison to the same period last year), up from 6.9% last month. The average sale price for the region was $462,028.

“The Auckland region, from Rodney through to Franklin, has continued to show positive annual growth, with most cities and districts showing slightly higher growth rates compared to last month. This positive trend was also shown in the average sale prices reported in most areas” said Glenda Whitehead of QV Valuations.

“Market activity remains very positive, with properties selling quickly, sometimes in less than a week. The bulk of sales continues to occur in the under $500,000 bracket in the Auckland region” said Whitehead. “North Shore, Auckland and Manukau cities show greater sales volumes for properties over $600,000. This is perhaps reflective of the type of housing and the desirability of living in these cities. Land values have risen significantly in recent years in the more desirable suburbs such as Takapuna and Devonport on the North Shore, Herne Bay, Remuera and the Eastern Bays within Auckland City, and the coastal suburbs such as Bucklands Beach and the bays within Manukau.”

Hamilton:
Hamilton’s property values increased by 12.2% (calculated over the three months ending March 2007 in comparison to the same period last year), the same growth rate as reported last month. The city’s average sale price was $338,226.

“Annual growth in property values in Hamilton remained stable for the period ending March” said Richard Allen of QV Valuations. “All areas of the city experienced marginal changes from what we reported last month with North East Hamilton up to 11.9% and Central City/North West Hamilton to 11.8%. South East Hamilton and South West Hamilton eased marginally to 11.2% and 10.6% respectively.”

“Although overall property value growth remained stable, the average sale price in Hamilton increased by $7000 to $338,226. Expectations are that sales activity will level off as we enter the autumn months and sale prices will remain relatively static” said Mr Allen.

Tauranga:
Tauranga property values grew 2.4% (calculated over the three months ending March 2007 in comparison to the same period last year), up from 2.0% reported last month and back to the same level reported in January.

“Small fluctuations in annual growth over the past few months reflect a stable property market” said Christopher Boyd of QV Valuations. “The average sale price increased from $412,490 last month to $414,165 this month and is consistent with the increase in property values.”

“Recent anecdotal evidence suggests an improvement in sales volumes and buyer confidence as we enter autumn. This appears to be supported by a greater number of sold signs appearing on marketed property” said Mr Boyd. “Demand for properties over the million dollar range seems to be volatile with a limited number of potential buyers.”

Wellington:
Property values in the Wellington region increased by 13.5% (calculated over the three months ending March 2007 in comparison to the same period last year). The average sale price for the region was $479,487.

“Wellington’s property market continues to climb with annual growth the highest since May last year” said Max Meyers of QV Valuations. “The strongest annual growth in the region was experienced in Lower Hutt with property values growing at 16.5%.”

“Within Wellington City, the Central City/Southern Suburbs area had the lowest increase at 9.7%, but still achieved an average sale price increase of over $50,000 over the past year” said Mr Meyers. “The highest increase in sale prices was in the Western suburbs of the city (including Karori, Northland, and Kelburn) where average sale prices have increased annually by $100,000 to $562,530” said Mr Meyers.

“Wellington market conditions, which strongly favour sellers at present, are not expected to moderate in the next few months” said Mr Meyers.

Christchurch:
Christchurch property values increased by 10.7% over the past year (calculated over the three months ending March 2007 in comparison to the same period last year), up from 9.8% reported last month. The city’s average sale price was $349,121.

“The provincial areas of Canterbury and Westland provided mixed results with Waimakariri, Ashburton, Timaru and Buller recording increases in growth rates, offset by easing growth in Hurunui, Banks Peninsula, Selwyn, Waimate, Grey and Westland. However, most areas show higher average sale prices in comparison to last month” said Mark Dow of QV Valuations.

“The team of QV Valuers in the Canterbury region continue to report a positive market with good levels of activity and competition for properties resulting in firm prices for most property types” said Mr Dow.

Dunedin:
Dunedin residential property values increased by 7.3% (calculated over the three months ending March 2007 in comparison to the same period last year), up from 6.1% last month. The average sale price in Dunedin was $261,388.

“QV statistics show a slight increase in annual growth since October 2006 following a period of decline in annual growth through 2005 and the majority of 2006. This growth has occurred in spite of increases experienced in interest rates over the same period. The growth pattern is similar to the other main centres in New Zealand.” said David Paterson of QV Valuations.

“Growth is steady across most areas in Dunedin, with the Peninsular/Coastal part of the city experiencing the highest growth rate of 11.4% this month” said Mr Paterson.

QV RESIDENTIAL PRICE MOVEMENT REPORT - as at March 2007

City / Region | March 2007 Property Value Growth % (Annual % Change) | February 2007 Property Value Growth % (Annual % Change) |
March 2007 Average sale price ($)
Far North 12.2 11.9 346,558
Whangarei 9.6 9.3 325,446
Kaipara 14.9 15.6 287,488
Rodney 10.3 9.2 480,681
- Hibiscus Coast 9.4 10.1 479,027
- Rodney (North) 11.8 8.1 482,938
North Shore City (A) # 7.7 7 557,234
- Coastal North Shore 7.6 6.3 647,230
- North Shore Onewa 7 6.7 433,542
- North Harbour 9.7 9.2 572,361
Waitakere City (A) # 8.3 7.8 384,354
Auckland City (A) # 5.9 4.8 539,515
- Auckland City (Central) 2.2 0.1 481,715
- Auckland City (East) 7.2 5.9 681,404
- Auckland City (South) 8 6.8 475,972
- Islands* -0.7 2.8 528,219
Manukau City (A) # 10.3 10.6 406,796
- Manukau East 9.6 8.9 518,601
- Manukau Central 9.6 9.2 336,118
- Manukau North West 11.9 14.6 355,109
Papakura (A) # 10.7 9.6 331,645
Franklin 14.2 11.5 365,738
Thames Coromandel* 5.1 N/A 496,752
Hauraki* N/A N/A 252,333
Waikato 14.1 16 285,018
Matamata Piako 11.1 10.5 253,380
Hamilton # 12.2 12.2 338,226
- Hamilton North East 11.9 11.5 409,792
- Central City/North West 11.8 10.2 320,229
- Hamilton South East 11.2 11.4 315,425
- Hamilton South West 10.6 10.7 303,165
Waipa 12.5 12.6 311,210
Otorohanga 27.1 26.2 220,500
South Waikato 27 23.6 131,622
Waitomo* 25.1 30.7 152,758
Taupo 4.7 5.5 312,099
Western Bay of Plenty 3.4 3.6 408,671
Tauranga # 2.4 2 414,165
Rotorua 11.8 13.7 254,584
Whakatane 1.4 1.7 329,329
Kawerau* 30.7 28.5 156,517
Opotiki* 13.3 10.6 186,390
Gisborne 13.5 27 257,064
Wairoa* 24.8 19.5 128,391
Hastings 3.9 4.8 311,695
Napier City # 0.2 0.7 327,824
Central Hawkes Bay* 10.1 4.5 222,413
New Plymouth 9.9 9.6 323,680
Stratford* 20.3 18.8 180,074
South Taranaki 27.2 27.3 182,318
Ruapehu 22 19.8 154,908
Wanganui 13.8 15.2 200,662
Rangitikei 21.3 20.6 150,217
Manawatu 15.8 16 234,413
Palmerston North # 13.1 12.6 278,776
Tararua 13.6 16.6 148,009
Horowhenua 17.6 16.3 210,388
Kapiti Coast 14 13.2 364,760
Porirua (W) # 14.1 13.1 360,310
Upper Hutt (W) # 14.8 15.7 323,235
Lower Hutt (W) # 16.5 17 344,636
Wellington City (W) # 12 10.8 479,487
- Wellington City & Southern 9.7 8.8 474,597
- Eastern Suburbs 16.1 14.6 517,916
- North Wellington 13 11.4 432,410
- Western Suburbs 11.1 9.6 562,530
Masterton 18.2 15.2 237,686
Carterton* 19.8 22.6 247,521
South Wairarapa 17.5 16.2 265,575
Tasman 5.8 6.3 359,546
Nelson # 10.1 7.6 335,601
Marlborough 15.6 11.2 337,259
Kaikoura* 1.4 0.5 343,993
Buller 10.7 8.1 174,217
Grey 23.7 26.5 219,752
Westland* 22.1 23.7 214,485
Hurunui* 9.7 10.8 305,058
Waimakariri 6.7 5.2 301,873
Christchurch City # 10.7 9.8 349,121
- East 11.7 10.4 291,689
- Hills 10 7.8 482,668
- Central City and North 10.3 10 406,306
- Southwest 10.8 10.1 319,500
Banks Peninsula* 11.7 15.5 442,356
Selwyn 19.2 21.1 347,810
Ashburton* 23.7 21.4 252,884
Timaru 8.9 7.1 216,708
MacKenzie* 5.2 2.4 198,068
Waimate 3.9 6 138,783
Waitaki 15.2 17.4 184,667
Central Otago 8.4 6.3 278,068
Queenstown Lakes 4.6 5.7 570,726
Dunedin # 7.3 6.1 261,388
- Central/Northern City 5.6 6 264,640
- Peninsular/Coastal Dunedin 11.4 10.1 239,307
- Southern City 9.7 5.9 246,639
- Taieri 5.9 6 283,609
Clutha 5.4 4.9 155,720
Southland 14.2 12.8 172,673
Gore 26.4 15.4 116,630
Invercargill # 24.4 20.7 176,456

Total NZ 9.8 9.3 363,188

Auckland Region (A) 7.5 6.9 462,028
Wellington Region (W) 13.5 12.8 414,229
Main Urban Areas # 9.4 8.7 400,781

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.

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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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