Residential Price Movement Report July 2007

Media release
10 August 2007

Embargoed to 11.59pm Sunday, 12 August 2007

Mixed signals across the property market

QV’s July statistics for the residential property market report a 12.7% growth in national property values over the past year (calculated over the three months ending July 2007 in comparison to the same period last year). Over this period, the average sale price for New Zealand properties was $381,298.

“QV is reporting a continued increase in property values across the country, however, the trends differ within cities and between regions. Prices in the main urban areas appear to be stabilising while some provincial cities continue to experience strong growth.” said QV spokesperson Blue Hancock.

“There are clear signs that the property market is slowing with feedback of fewer listings and buyers, resulting in fewer sales. However, as the number of buyers is dropping along with the number of listings, this isn’t putting significant downward pressure on prices.” said Mr Hancock.

“We are reporting falls in some average sales prices, however changes in average or median sales prices are not always an accurate measure of changes in property value. They can simply reflect more activity in the lower end of the market, where affordability is becoming a key issue. This is evident within the wider Auckland region, where we are showing the average sale price to have dropped to $490,818 even though we are reporting property values to have increased to 11.9% over the past year” said Mr Hancock. “QV uses an index methodology that compares the base value of every property to its sale price to determine changes in property value. This overcomes the limitations of simple changes in averages or medians.”

The main urban areas are showing signs of flattening prices with minimal difference in QV’s figures from last month. Auckland City’s property values were up by 10.2%, similar to 9.9% reported last month. Hamilton and Wellington were fairly static at 13.6% and 14.7% respectively. Christchurch remained flat at 13.4% while Dunedin eased slightly from 11.4% to 10.8%. “Analysis of the latest activity suggests that the urban markets may be plateauing. If the spring market doesn’t provide a surge, then we would expect to see annual growth in property values dropping back to single figures in coming months” said Mr Hancock.

A number of areas in the country are still achieving significant increases in property values. Gisborne continued to perform well with annual growth of 25%. Invercargill maintained its strong market with values increasing by an impressive 30.9%. Some areas are beginning to show evidence of the easing market with Queenstown at 11.5%, down from 12.5% last month and New Plymouth easing to 10.3% and Rotorua to 8.9%.

ENDS

Main Urban Areas Commentary:

Auckland:
Property values in the Auckland region increased by 11.9% over the past year (calculated over the three months ending July 2007 in comparison to the same period last year), up from 11.2% reported last month

“While the region continues to report strong growth in property values, there is a feeling that the market is beginning to slow” said Glenda Whitehead of QV Valuations. “The latest QV statistics also report a drop in the average sale price in the region from $492,857 last month to $490,818”.

“Our valuers are reporting patchy market activity across the region. Activity levels, on the whole, appear lighter than experienced for a number of years. However, agents in some areas continue to report good levels of listings and sale prices that are keeping the vendors happy. People are acting very cautiously with the time from listing to sale appearing to be stretching out”.

Hamilton:
Residential property values in Hamilton grew by 13.6% over the past year (calculated over the three months ending July 2007 in comparison to the same period last year). The average sale price for the city was $356,849.

“Hamilton has been experiencing steady growth in property values over the past couple of months” said Richard Allen of QV Valuations. “However, there are signs that the market in Hamilton is beginning to ease with South East Hamilton 12.5% being the only area in the city that records higher growth than last month. South West Hamilton remained at 13.2% while Central/North West Hamilton and North East Hamilton eased to 12% and 13.6% respectively.”

“Despite signs of a softening market, Hamilton still records an increase in the average sale price from $354,461 last month to $356,849 this month” said Mr Allen. “Expectations are that sales activity will decline as a result of increasing interest rates. However, the general feeling is that sale prices are likely to remain fairly static rather than decrease”.

Tauranga:

Tauranga property values grew by 6.5% (calculated over the three months ending July 2007 in comparison to the same period last year). The growth rate is similar to that reported last month (6.6%).

“The Tauranga property market seems to be on a plateau with growth rates at similar levels over the past few months” said Christopher Boyd of QV Valuations. “The average sale price increased from $419,556 last month to $425,865 this month”.

“Recent anecdotal evidence suggests that sales volumes and inquiry have dropped off significantly and the market is beginning to slow. The school holidays also historically have tended to show lower levels of activity. Real estate agents report a reasonable level of stock but reduced sales volumes with potential purchasers less inclined to make the final decision. There is an increasing number of conditional contracts to purchase property, which reflects more buyer caution and longer sale timeframes” said Mr Boyd.

Wellington:

Property values in the Wellington region grew by 16.3% over the past year (calculated over the three months ending July 2007 in comparison to the same period last year). The average sale price for the region was $438,406.

“The expected effect of higher interest rates is yet to be reflected in the Wellington market. The annual increase for the Wellington region is 16.3%, the highest for the past two years. The leading area is Upper Hutt where the growth records a high of 20.4%. The lowest increase is for Wellington City 14.7%, but still at a similar level reported last month” said Max Meyers of QV Valuations.

“The typical winter slowdown in activity is here. We are expecting the current high interest rates to dampen any increase in activity and price as we approach the end of the year, particularly as there will be a significant number of mortgage renewals in this period” said Mr Meyers “This slowdown is expected to be reflected more in sale volume than price”.

“Feedback from our valuers suggests that the slowdown in activity is most evident furthest away from the city centres in the areas such as Wainuiomata" said Mr Meyers.

Christchurch:

Christchurch’s residential property values increased by 13.4% over the past year (calculated over the three months ending July 2007 in comparison to the same period last year). Over this period, the average sale price for the city was $356,969.

“The year on year growth for Christchurch property values remains stable at 13.4%, the same as reported last month. The provincial areas of Canterbury generally fared a little better with most centres recording higher growth rates than last month” said Mark Dow of QV Valuations.

“The volume of sales is down for this period. This indicates caution in the market, but also reflects the seasonal slowdown over winter. Overall, prices appear to be holding up at present. However, rising interest rates, general affordability and market confidence are having an impact on purchasing decisions” said Mr Dow. “The lower to middle housing price bracket is driving most of the activity in the local market.”

Dunedin:

Dunedin’s residential property values increased by 10.8% over the past year (calculated over the three months ending July 2007 in comparison to the same period last year), down from 11.4 % last month. Over this period, the average sale price in Dunedin was $274,551

“We are now seeing signs of a slowing market in Dunedin with easing growth rates. However, it is too soon to say whether it is a result of the recent interest rate rises or the seasonal winter influence with a very cold and wet July” said David Paterson of QV Valuations.

“Across the city, growth has been consistent, ranging from 9% to 11%. There has been a lift in the average sale price, mainly due to a number of sales over $1 million recorded over this period.” said Mr Paterson. “Agents are still reporting good attendances at open homes, however there is a noticeable shortage of listings on the market”.

QV RESIDENTIAL PRICE MOVEMENT REPORT - as at July 2007

City / Region / July 2007 Property Value Growth % / June 2007 Property Value Growth % / July 2007
Average sale price
/ (Annual % Change) / (Annual % Change) / ($)
Far North / 9.7 / 12.3 / 371,858
Whangarei / 11.1 / 10.7 / 339,672
Kaipara / 0.5 / 4.6 / 298,738
Rodney / 13.2 / 12.7 / 502,713
- Hibiscus Coast / 12.6 / 11.5 / 516,947
- Rodney (North) / 14.1 / 13.9 / 480,218
North Shore City (A) # / 13.3 / 12.6 / 586,325
- Coastal North Shore / 13.6 / 12.3 / 683,716
- North Shore Onewa / 12.3 / 12.3 / 454,933
- North Harbour / 13.7 / 13.5 / 607,783
Waitakere City (A) # / 12.9 / 11.6 / 397,203
Auckland City (A) # / 10.2 / 9.9 / 585,610
- Auckland City (Central) / 5.2 / 5 / 519,580
- Auckland City (East) / 12.9 / 12.4 / 767,491
- Auckland City (South) / 11.7 / 10.9 / 498,925
- Islands / 4.7 / 3.3 / 546,128
Manukau City (A) # / 13.7 / 12.6 / 425,613
- Manukau East / 14.1 / 12.8 / 551,266
- Manukau Central / 13.8 / 13 / 345,199
- Manukau North West / 13.8 / 12.8 / 381,524
Papakura (A) # / 12.2 / 10.6 / 347,626
Franklin / 9.9 / 9.8 / 370,894
Thames Coromandel / 6 / 5.4 / 472,407
Hauraki* / N/A / N/A / N/A
Waikato / 13.2 / 9.9 / 273,922
Matamata Piako / 14.6 / 14.6 / 279,497
Hamilton # / 13.6 / 13.3 / 356,849
- Hamilton North East / 13.6 / 14.1 / 447,543
- Central City/North West / 12 / 12.4 / 326,761
- Hamilton South East / 12.5 / 12.1 / 333,282
- Hamilton South West / 13.2 / 13.2 / 323,875
Waipa / 10.4 / 11.5 / 328,156
Otorohanga* / 6 / 5.1 / 210,133
South Waikato / 26 / 27.1 / 145,865
Waitomo* / 30.1 / 28.2 / 175,183
Taupo / 8 / 6.8 / 333,763
Western Bay of Plenty / 6.2 / 4.5 / 405,496
Tauranga # / 6.5 / 6.6 / 425,865
Rotorua / 8.9 / 11.4 / 268,022
Whakatane / 5.7 / 2 / 307,595
Kawerau* / 30.3 / 29.5 / 139,470
Opotiki* / 20.3 / 22.9 / 224,737
Gisborne / 25 / 20.7 / 275,663
Wairoa* / 20.8 / 17.9 / 166,310
Hastings / 9.8 / 6.9 / 304,516
Napier City # / 3.4 / 2.9 / 334,269
Central Hawkes Bay* / 13.1 / 15.9 / 218,952
New Plymouth / 10.3 / 11 / 335,265
Stratford* / 12.7 / 15.1 / 193,338
South Taranaki / 26 / 26.5 / 187,925
Ruapehu* / 13.4 / 18.9 / 173,111
Wanganui / 15.8 / 14.1 / 199,280
Rangitikei / 17.4 / 16.3 / 169,947
Manawatu / 25.1 / 21.8 / 232,817
Palmerston North # / 14.8 / 14.6 / 301,734
Tararua / 20.3 / 18.4 / 148,374
Horowhenua / 20.9 / 19.9 / 225,558
Kapiti Coast / 15.1 / 17 / 376,835
Porirua (W) # / 16.6 / 16.2 / 397,770
Upper Hutt (W) # / 20.4 / 17.9 / 326,911
Lower Hutt (W) # / 19.1 / 18.5 / 370,628
Wellington City (W) # / 14.7 / 14.5 / 514,611
- Wellington City & Southern / 15.3 / 13.4 / 518,390
- Eastern Suburbs / 14.9 / 15 / 562,386
- North Wellington / 14.2 / 15.2 / 471,628
- Western Suburbs / 14.7 / 15.7 / 554,409
Masterton / 23.9 / 19.2 / 256,997
Carterton* / 22.8 / 23.3 / 268,084
South Wairarapa / 27.8 / 30.3 / 292,239
Tasman / 10.5 / 10 / 380,132
Nelson # / 14.4 / 13.6 / 329,802
Marlborough / 18.7 / 18.6 / 352,023
Kaikoura* / 11.9 / 3.5 / 352,972
Buller / 11.4 / 16 / 172,578
Grey* / 27.5 / 24.2 / 236,521
Westland* / 19.5 / 16.5 / 200,680
Hurunui* / 10.1 / 6.7 / 300,611
Waimakariri / 10.4 / 10.4 / 321,597
Christchurch City # / 13.4 / 13.4 / 356,969
- East / 14.9 / 15.5 / 297,027
- Hills / 13.2 / 14.1 / 505,708
- Central City and North / 12.7 / 11.5 / 404,372
- Southwest / 14.4 / 14.6 / 338,202
- Banks Peninsula* / 9.1 / 6.1 / 430,011
Selwyn / 24.5 / 22.7 / 378,074
Ashburton / 17.1 / 14.8 / 268,596
Timaru / 12.8 / 12.7 / 223,067
MacKenzie* / 9.9 / 10.6 / 219,889
Waimate* / 15.8 / 14.9 / 175,562
Waitaki / 18.7 / 19.1 / 202,927
Central Otago / 13.1 / 12.4 / 297,330
Queenstown Lakes / 11.5 / 12.5 / 589,162
Dunedin # / 10.8 / 11.4 / 274,551
- Central/Northern City / 11.7 / 13.8 / 278,853
- Peninsular/Coastal Dunedin* / 10.1 / 5.1 / 234,347
- Southern City / 9.1 / 9.6 / 259,658
- Taieri / 10.4 / 10.3 / 299,647
Clutha / 12.7 / 11.3 / 162,465
Southland / 20.1 / 18.8 / 176,183
Gore / 25.8 / 23.3 / 132,056
Invercargill # / 30.9 / 28.2 / 186,798

Total NZ / 12.7 / 12.2 / 381,298

Auckland Region (A) / 11.9 / 11.2 / 490,818
Wellington Region (W) / 16.3 / 15.8 / 438,406
Main Urban Areas # / 12.7 / 12.2 / 420,633

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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