House prices holding up

Media release
7 September 2007

House prices holding up

August property statistics released by QV today report a 13.3% growth in national property values over the past year (calculated over the three months ending August 2007 in comparison to the same period last year). Over this period, the average sale price for New Zealand properties was $394,397.

“Across the country, year on year growth in property values remains strong” said QV spokesperson Blue Hancock. “Reduced winter listings have been matched by less buyer activity, creating a balance in the market and resulting in prices still holding up in most areas”.

House prices across the main urban centres are at levels similar to the past few months. Auckland City’s property values have increased by 12% over the past year. Hamilton, Wellington and Christchurch all recorded growth rates above 14%.

Of the provincial cities, Gisborne 25.3% and Invercargill 34% showed further increases in annual growth and maintained their top positions in the country. Other provincial cities remained steady with Tauranga, Palmerston North and Queenstown growing at 7%, 14.7% and 11.6% respectively.

Several areas experienced easing growth rates for the period ending August. Of the main centres, the growth rate in Dunedin declined from 10.8% last month to 9.6% this month. Several provincial cities including Wanganui 13.8%, Hastings 8.6%, and New Plymouth 9.4% also experienced easing growth in property values. “With the effect of the winter market we are likely to see annual growth easing in more areas in coming months” said Mr Hancock.

ENDS

Main Urban Areas Commentary:

Auckland:
Property values in the Auckland region grew by 13.1% over the past year (calculated over the three months ending August 2007 in comparison to the same period last year). The average sale price for the region was $504,860.

This month’s statistics continue to present a rosy picture of the residential property market for the Auckland region. The 'year on year' growth rate is up on levels reported last month across the Auckland region with the exception of Franklin, which remains fairly static. Average sale prices in different cities and regions are all rising.

“Sales volumes in all areas are down, but prices seem to be holding. This scenario fits with the reports of reduced levels of listings over the winter period” said Glenda Whitehead of QV Valuations.

“Our valuers working in Waitakere city report a slowing of activity over the past 4-6 weeks. Agents are saying that there is still a reasonable number of buyers looking for property. However, the shortage of good stock along with high vendor expectations is making the sales hard work” said Whitehead. “There is evidence of properties staying on the market for 6-8 weeks. Properties at the lower end of the market and the more highly priced ones are slower to move, in comparison to the medium priced suburbs. Activity levels still appear healthy in Te Atatu, New Lynn and parts of Henderson”.

“Within Waitakere city properties that have been recently renovated seem to be selling quicker than those that are dated or "tired", with the latter sitting very long on the market, usually because the asking price is unrealistic” said Whitehead.

“Activity in the Manukau area is down in recent months, with limited stock on the market at present. Generally it is felt that sale prices appear steady. Many people involved in the wider residential market feel that activity levels will increase as we get into the spring months” said Whitehead.

Hamilton:
Hamilton’s property values increased by 14.1% over the past year (calculated over the three months ending August 2007 in comparison to the same period last year).

“The property market in Hamilton still shows its resilience with the value growth for the city higher than last month. North East 14.3% and South East Hamilton 13.1% reported slight increases in annual growth rates. However, there are signs that the market is beginning to ease with South West Hamilton dropping to 12.2% and North West Hamilton static at 12%” said Richard Allen of QV Valuations.

“The Hamilton market’s durability is also reflected in an increase in the average sale price from $356,849 to $358,944 this month. Expectations are that sales activity will decline, however sale prices are likely to remain static rather than decrease” said Mr Allen.

Tauranga:
Tauranga property values grew by 7% over the past year (calculated over the three months ending August 2007 in comparison to the same period last year). “The Tauranga property market has been stable with growth rates recorded at similar levels over the past four months” said Christopher Boyd of QV Valuations.

“The average sale price in the city increased from $425,865 last month to $433,748 this month. This increase is a reflection of where the market activity is occurring” said Mr Boyd. “It appears that investor interest in the lower end has cooled with some investors deciding it is time to cash up”.

“Recent anecdotal evidence suggests that sales volumes and inquiry continue to slow and lending institutions are experiencing the lowest levels of activity for a number of years” said Mr Boyd.

Wellington:
Property values in the Wellington region increased by 16.5% over the past year (calculated over the three months ending August 2007 in comparison to the same period last year), similar to the level reported last month. The average sale price for the region was $448,267.

"Increases in property values have been steady in the Wellington Region, with Upper Hutt and Lower Hutt continuing to lead the market with 21.5% and 20% respectively” said Max Meyers of QV Valuations. “The western part of Wellington City is the highest priced area with an average price of over $570,000”.

“Feedback from the market is reporting consistently low levels of sale activity across the region. Expectations are that the very buoyant figures reported for the Wellington region will soon ease in coming months. With this in mind more caution should be exercised in pricing property, as ambitious pricing is highly unlikely to be covered in the current market conditions” said Mr Meyers.

Christchurch:
Property values in Christchurch increased by 14.1% over the past year (calculated over the three months ending August 2007 in comparison to the same period last year), up from 13.1% reported last month. The average sale price for the city was $359,809.

“The lower end of the market dominated by first home buyers and investors is very active, which fuels the growth in the city” said Mark Dow of QV Valuations. “Nearly 75% of Christchurch sales are in the under $400,000 bracket. Less competition and interest is seen in the upper end of the market.”

“The market in the provincial centres seems to be on a plateau with minimal difference in growth rates compared to last month. Selwyn is the only area that recorded a fall in property values from 24.5% to 21.6% this month” said Mr Dow. “The general feeling is that the market will continue to flatten and growth rates will soon be easing in more areas”.

Dunedin:
Dunedin’s residential property values increased by 9.6% over the past year (calculated over the three months ending August 2007 in comparison to the same period last year), down from 10.8% last month. Over this period, the average sale price in Dunedin was $271,703

“The continued easing of the annual growth in the city is a reflection of the usual slow down over the winter period, rather than an indication of any significant market correction. There still appears to be a good balance between supply and demand” said David Paterson of QV Valuations. “Expectations are that property values will continue the trend of easing as seen over the past two months.”

“Different patterns of the property growth are seen across the city. The northern city 7.3% and southern city 9.1% are growing at slower rates than last month while Taieri 12% and the coastal/peninsular location 16% report further increases in annual growth” said Mr Paterson.

QV RESIDENTIAL PRICE MOVEMENT REPORT - as at August 2007
/ /
City / Region / August 2007 Property Value Growth % / July 2007 Property Value Growth % / August 2007
Average sale price
(Annual % Change) / (Annual % Change) / ($)
Far North / 10.5 / 9.7 / 372,594
Whangarei / 13.3 / 11.1 / 340,757
Kaipara / 0.1 / 0.5 / 301,501
Rodney / 14.2 / 13.2 / 513,743
- Hibiscus Coast / 12.6 / 12.6 / 537,650
- Rodney (North) / 18.7 / 14.1 / 470,397
North Shore City (A) # / 14.4 / 13.3 / 593,561
- Coastal North Shore / 14.6 / 13.6 / 693,956
- North Shore Onewa / 14.4 / 12.3 / 461,889
- North Harbour / 14.2 / 13.7 / 619,330
Waitakere City (A) # / 13.5 / 12.9 / 399,633
Auckland City (A) # / 12 / 10.2 / 594,876
- Auckland City (Central) / 6.9 / 5.2 / 516,479
- Auckland City (East) / 13.9 / 12.9 / 789,762
- Auckland City (South) / 13.6 / 11.7 / 514,514
- Islands* / 9.9 / 4.7 / 612,338
Manukau City (A) # / 14.1 / 13.7 / 432,384
- Manukau East / 14.3 / 14.1 / 571,243
- Manukau Central / 14.3 / 13.8 / 349,387
- Manukau North West / 14.4 / 13.8 / 388,287
Papakura (A) # / 12.8 / 12.2 / 347,463
Franklin / 9.8 / 9.9 / 373,580
Thames Coromandel / 4 / 6 / 451,864
Hauraki* / N/A / N/A / N/A
Waikato / 16.7 / 13.2 / 262,047
Matamata Piako / 17.1 / 14.6 / 272,316
Hamilton # / 14.1 / 13.6 / 358,944
- Hamilton North East / 14.3 / 13.6 / 445,431
- Central City/North West / 12 / 12 / 322,127
- Hamilton South East / 13.1 / 12.5 / 340,566
- Hamilton South West / 12.2 / 13.2 / 329,843
Waipa / 8.2 / 10.4 / 329,555
Otorohanga* / -0.4 / 6 / 217,393
South Waikato / 27 / 26 / 144,411
Waitomo* / 32.6 / 30.1 / 174,449
Taupo / 4.4 / 8 / 340,233
Western Bay of Plenty / 5.5 / 6.2 / 399,390
Tauranga # / 7 / 6.5 / 433,748
Rotorua / 9.7 / 8.9 / 277,271
Whakatane / 10.7 / 5.7 / 312,409
Kawerau / 30.1 / 30.3 / 146,066
Opotiki* / 12.3 / 20.3 / 248,309
Gisborne / 25.3 / 25 / 277,198
Wairoa* / 37.5 / 20.8 / 144,241
Hastings / 8.6 / 9.8 / 311,194
Napier City # / 4.4 / 3.4 / 344,433
Central Hawkes Bay / 12.3 / 13.1 / 202,128
New Plymouth / 9.4 / 10.3 / 338,982
Stratford* / 12.1 / 12.7 / 199,845
South Taranaki / 21.9 / 26 / 190,840
Ruapehu / 12.1 / 13.4 / 177,029
Wanganui / 13.8 / 15.8 / 207,801
Rangitikei / 15 / 17.4 / 166,156
Manawatu / 21.2 / 25.1 / 234,771
Palmerston North # / 14.7 / 14.8 / 310,701
Tararua / 19.7 / 20.3 / 156,376
Horowhenua / 21.4 / 20.9 / 226,542
Kapiti Coast / 14.7 / 15.1 / 378,914
Porirua (W) # / 15.8 / 16.6 / 400,507
Upper Hutt (W) # / 21.5 / 20.4 / 333,822
Lower Hutt (W) # / 20 / 19.1 / 383,579
Wellington City (W) # / 14.5 / 14.7 / 516,147
- Wellington City & Southern / 14.9 / 15.3 / 529,400
- Eastern Suburbs / 13.2 / 14.9 / 557,455
- North Wellington / 14.1 / 14.2 / 464,471
- Western Suburbs / 16.9 / 14.7 / 571,902
Masterton / 26.3 / 23.9 / 259,123
Carterton* / 28.6 / 22.8 / 269,407
South Wairarapa / 22.4 / 27.8 / 305,434
Tasman / 11.6 / 10.5 / 379,841
Nelson # / 15.3 / 14.4 / 333,632
Marlborough / 18.7 / 18.7 / 354,224
Kaikoura* / 27.5 / 11.9 / 328,964
Buller / 17.3 / 11.4 / 173,868
Grey / 26.5 / 27.5 / 245,505
Westland* / 17.1 / 19.5 / 203,113
Hurunui / 10.9 / 10.1 / 288,045
Waimakariri / 10.5 / 10.4 / 324,497
Christchurch City # / 14.1 / 13.4 / 359,809
- East / 15.3 / 14.9 / 306,534
- Hills / 13.4 / 13.2 / 505,597
- Central City and North / 13.9 / 12.7 / 411,787
- Southwest / 13.8 / 14.4 / 336,355
- Banks Peninsula / 10.6 / 9.1 / 406,828
Selwyn / 21.6 / 24.5 / 362,437
Ashburton / 18.4 / 17.1 / 276,227
Timaru / 14 / 12.8 / 227,574
MacKenzie* / 22.6 / 9.9 / 248,054
Waimate* / 25.3 / 15.8 / 182,581
Waitaki / 21.8 / 18.7 / 205,566
Central Otago / 10.5 / 13.1 / 315,569
Queenstown Lakes / 11.6 / 11.5 / 577,915
Dunedin # / 9.6 / 10.8 / 271,703
- Central/Northern City / 7.3 / 11.7 / 273,816
- Peninsular/Coastal Dunedin / 16.2 / 10.1 / 231,273
- Southern City / 8.5 / 9.1 / 263,364
- Taieri / 12.3 / 10.4 / 297,120
Clutha / 10.7 / 12.7 / 171,602
Southland / 20.2 / 20.1 / 181,584
Gore / 27.4 / 25.8 / 133,941
Invercargill # / 34 / 30.9 / 192,678

Total NZ / 13.3 / 12.7 / 394,397

Auckland Region (A) / 13.1 / 11.9 / 504,860
Wellington Region (W) / 16.5 / 16.3 / 448,267
Main Urban Areas # / 13.5 / 12.7 / 435,538

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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