Media release
5th September 2008
Embargoed to 11.59pm Sunday, 7 September 2008
Mixed signals in the property market
QV's August statistics for the residential property market report a 4.5% decline in national property values over the
past year (calculated over the three months ending August 2008 in comparison to the same period last year), down on the
2.2% decline reported in July. The average New Zealand sale price reduced slightly to $391,487.
“Property values continue to fall across the country with all main and provincial centres now showing values lower than
they were 12 months ago” said Blue Hancock of QV Valuations. “There are definitely more properties selling at reduced
prices as vendors adjust their expectations. Areas on the fringes of main centres and holiday homes are particularly
affected as increasing commuting costs and decreasing discretionary spend become key considerations” said Hancock.
“The market has been out of equilibrium with a lack of buyers, however there are early signs of a more positive mood.
Many buyers are realising that price decreases are making this a good time to buy, and that they can bargain strongly.
As a result there will be further declines in value before the market levels out” said Hancock.
“Some investors also appear to be re-entering the market, particularly in Auckland and Wellington, as they pick up well
priced properties. However across the country investment returns are being impacted by an increase in properties
available for rent, higher mortgage payments, and an outlook of minimal capital growth” said Hancock.
Across the Auckland area property values are down 5.8% compared to the same time last year, declining further from the
-3.6% reported last month. Hamilton City’s values have slipped further to -8.5% and Tauranga to -5.3%. The Wellington
area has also declined further to -2.9%, Christchurch to -5.8% and Dunedin to -7.8%.
All of the main provincial centres are now showing property values less than the same time last year. Whangarei has
declined -4.1%, Rotorua -0.3%, Gisborne -10.4%, Napier -3.6%, Hastings -4.1%, New Plymouth -4.8%, Wanganui -4.5%, and
Palmerston North -8.1%. In the South Island, Nelson dropped further to -3.7%, Queenstown Lakes to -3.4%, and
Invercargill becomes the last of the provincial centres to drop into negative growth at -0.1%.
ENDS
Auckland
Property values in the Auckland region declined by 5.8% over the past year (calculated over the three months ending
August 2008 in comparison to the same period last year), down further from the 3.6% decline recorded in July. The
average sale price for the region decreased to $503,026.
“Continuing the trend reported last month, QV’s residential price movement shows a further easing in the residential
market in comparison to where it was a year ago. While it is too early to suggest we have hit the bottom of the market,
the general mood around town seems to be a bit lighter. We have had reports from all over Auckland that buyer enquiry
has picked up and “sold” signs are also more conspicuous around the city” said Glenda Whitehead of QV Valuations.
“In terms of property values, feedback from our valuers suggests that either the market in some areas has slipped
further than we initially thought, or that panic sellers have bailed out of some areas. This is evident for example in
Te Atatu Peninsula, where very low values have been realised through the midst of winter. On the flip side, a well
maintained home in a central area, such as Greenlane, Epsom or Remuera, is more likely to sell at a smaller discount
compared with previous levels. Our valuers are observing variances in values for the same type of property within an
area; these inconsistencies suggest that sale prices are reflecting sellers' circumstances such as an urgent need to
sell, not just a general market trend” said Whitehead.
“Property values in Manurewa have declined. Where previously you might have paid $350,000 for a home, you may now pick
up that same property for under $300,000. However, turnover in Manurewa is relatively good, perhaps suggesting vendors
are accepting prices in line with the market trends. In contrast, the drops in value have been less severe in some of
the older established areas such as Howick, Pakuranga and Bucklands Beach where higher value properties may be staying
on the market longer to achieve the desired price” said Whitehead.
“Indications are that the declines in the apartment market are easing, with buyer interest perhaps sparked by greater
affordability” said Whitehead.
Hamilton
Property values in Hamilton declined by 8.5% over the past year (calculated over the three months ending August 2008 in
comparison to the same period last year), down further from the 5.4% decline recorded in July. The average sale price
for the city declined further to $335,292.
“The downward trend in property values in Hamilton City continued in August, dropping to a new low of -8.5% year on
year. This decline has been driven by a lack of confidence in the residential property market and high interest rates
which are continuing to curb demand” said Richard Allen of QV Valuations.
“The sharpest decline in property values is evident in the North East which decreased from -4.1% in July to -7.3% in
August, and the South East area which moved from -5.2% to -9.7%” said Mr Allen.
“The market environment now strongly favours buyers and that many properties are selling at reduced prices. The poor
health of the residential property market has been reinforced by the average sale price for the city which fell for the
third consecutive month, declining sharply from $353,278 in July to $335,292 in August, the lowest point since February
2007” Mr Allen said.
Tauranga
Property values in Tauranga declined by 5.3% over the past year (calculated over the three months ending August 2008 in
comparison to the same period last year), down from the 2.6% decline reported last month. The average sale price
increased to $445,203.
“There have been some signs of a reprieve in the subdued Tauranga property market over the last month. Feedback from
leading Real Estate Agents is that the number of enquiries is up and so too are open home attendances. We expect the
number of house sales to trend upwards ever so slightly in the short term. This can be put down to the changing of the
seasons and potentially to some buyers believing that the market has hit its low point. While this small burst of
activity may not last, it does show that vendors are more open to the offers that are being tabled” said Shayne
Donovan-Grammer of QV Valuations.
“The current environment presents a good opportunity for first home buyers to enter the property market. There are
plenty of options available and if buyers do their research properly there are definitely some good buys to be found”
said Mr Donovan-Grammer.
“The $500,000 to $700,000 price bracket remains particularly sluggish, as do section and apartment sales. Some of the
sales which are occurring in these areas are showing significant reductions in value from what they were this time last
year. This further substantiates that buyers have the upper hand with the luxury of choice” said Mr Donovan-Grammer.
Wellington
Property values in the Wellington region decreased by 3.8% over the past year (calculated over the three months ending
August 2008 in comparison to the same period last year), down from 1.6% decline reported last month. The average sale
price for the region decreased from $451,869 to $437,061.
“All areas throughout the Wellington region are showing declining property values. The drop in values ranges from 6.1%
year on year in Upper Hutt, through to 1.2% decrease in the Eastern Suburbs of Wellington. Average sales prices are also
dropping across the region down $11,200 compared with the same period last year and $14,800 from last month” said Max
Meyers of QV Valuations.
“We note that for Upper Hutt, Hutt City, Porirua and Wellington, over 70% of the sales are now below last years rateable
values. This has increased notably from last month and reinforces the change in the market over the past year” said Mr
Meyers.
“The QV statistics show a persistent decline in values that we expect to continue for the next few months. Some buyers
are being attracted by the lower prices and some of the older stock is starting to sell. If this trend continues we can
expect to see volumes begin to increase and the market may gradually return to more normal levels of activity, but
without the property price rises of the past few years” Mr Meyers said.
Christchurch
Property values in Christchurch decreased by 5.8% over the last year (calculated over the three months ending August
2008 in comparison to the same period last year) down from 2.1% annual decline reported last month. The average sale
price for the city decreased by $7,384 to $358,014.
Within Christchurch City the Eastern suburbs have suffered the largest decline in value over the last year with a fall
of 7.2%. “This reflects a movement towards better-quality homes and locations, and a tougher market environment for
investment properties and modest housing” said local QV manager Mark Dow.
All locations in Canterbury have suffered declining values from those reported last month. The hardest hit is Banks
Peninsula which decreased 7% on its position in July, taking it to -3.4% year on year. “Generally we have noticed a
larger impact on properties located on the outskirts of city that have greater commuting distances. There is also less
interest in the holiday home market with the change in the economic conditions” said Mr Dow.
“Spring is now upon us and there are some signs of increased interest in the property market. However, given the volume
of house sales is so low compared to our normal level, we are still well short of a turn around in fortunes for the
local housing market. Price pressures are likely to be with us for sometime yet, which is good news for those wishing to
purchase or those intending to trade up or down” said Mr Dow.
Dunedin
Dunedin’s residential property values decreased by 7.8% over the past year (calculated over the three months ending
August 2008 in comparison to the same period last year), down further from the 6.8% decline reported last month. The
average sale price in Dunedin increased slightly to $277,790.
The rate of the decline in property value is greatest in the Southern part of the city where values have decreased 9.5%
year on year. In contrast, the Taieri area decreased by 6.9% over the same period.
The average sale price increased by $3,898 compared with July. This figure has been skewed slightly as a result of three
sales over $1m recorded in the figures.
“There is anecdotal evidence that we may be seeing a slight improvement in the market. The rate of decline reported in
August is less than it has been for some months, potentially signalling that the market is starting to level off. Agents
are reporting more interest from buyers and an acceptance from some vendors that they need to meet the market if they
wish to sell. This change has resulted in the sale of a number of properties that have been sitting around for some
time” said David Paterson of QV Valuations.
“While these trends are positive, it is too early to say that we are over the worst of the market correction. We are
likely to see values continuing to decline albeit at a slower rate in the short term, followed by a sustained period of
little or no growth as the market catches up” Mr Paterson said.
ENDS