The property market in 2008

Media release
15th January 2009

The property market in 2008

2008 has been a pivotal year for the NZ property market with a sustained drop in property values for the first time since 1998. QV’s December Residential Price Movement report shows property values fell by 7.4% during the year.

“Property values held reasonably flat through the first three months of the year, but the decline kicked in through the autumn and winter months, during which time values dropped 6%. With the significant drops in interest rates over the past three months, there has been an increase in market activity and values appear to be flattening again” said Mark Dow of QV Valuations.

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“To keep 2008 in perspective it’s useful to look back at the activity of the past two decades. Property values grew by 120% between 2002 and mid 2007. By way of comparison, the last period of sustained growth occurred between late 1992 and the end of 1997 when property values increased by 54%” said Dow. “After such a period of sustained growth it’s inevitable that we will see a correction. The question remains how long this period of falling property values will continue.”

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“It’s also interesting to look at the types of properties selling at the different stages of the property cycle. Between 2000 and 2003 the number of house sales more than doubled, with a dramatic increase in the proportion of lower value property selling. In the years 2004 to 2007, the number of house sales remained fairly steady, as did the proportion of low, medium and high value sales. During 2008, the number of house sales fell dramatically and the proportion of lower value properties selling significantly decreased. This pattern reflects the wider drivers of the property cycle. When the economy is strong; job prospects are good and immigration is increasing, then demand for houses, particularly first homes, pushes prices up. As the economy weakens and affordability becomes a real issue, first home buyers are usually the first to suffer; sales volumes drop and activity in the market moves back to mid to higher end properties as we saw through 2008” said Dow.

Our December report showed a 7.4% decline over the past year (calculated over the three months ending December 2008 in comparison to the same period last year) while the average New Zealand sale price for December increased slightly to $378,605.

All the main centres showed further declines in property values. In the Auckland Area values dropped back to -8.0% from the -7.4% reported in November. Hamilton values fell to -9.3% from -8.5%, Tauranga to -9.0% from -8.4%, and the Wellington Area to -6.9% from the -6.0%. Christchurch and Dunedin followed the same trend dropping to -8.0% and -7.7% respectively.

Most of the main provincial cities followed the national trend with property values easing further. Whangarei dropped -8.6%, Napier -8.1%, Nelson -7.6%, and Invercargill -9.1%. However, a number of areas bucked the trend most notably popular summer destinations like Queenstown whose property values dropped to -10.6% from the -12.5% reported in November, and Gisborne to -5.8% from -9.6% last month.

ENDS

QV RESIDENTIAL PRICE MOVEMENT REPORT - AS AT DECEMBER 2008

City/Region / December 2008 Property Value Growth % (Annual % Change) / November 2008 Property Value Growth % >(Annual % Change) / December 2008 Average sale price

Far North / -1.7 / 0.4 / 388,138
Whangarei / -8.6 / -8 / 326,749
Kaipara* / -13.3 / -13.3 / 317,154
Rodney / -6.9 / -5.8 / 519,497
- Hibiscus Coast / -8.4 / -7.9 / 527,142
- Rodney (North) / -5 / -2.2 / 505,597
North Shore (A) # / -8.9 / -6.9 / 539,596
- Coastal North Shore / -9.3 / -6.9 / 588,026
- North Shore Onewa / -9 / -8 / 430,635
- North Harbour / -7.5 / -4.8 / 629,620
Waitakere (A) # / -8.4 / -8 / 387,288
Auckland (A) # / -7.9 / -7.7 / 548,507
- Auckland City (Central) / -8.8 / -8.7 / 460,499
- Auckland City (East) / -7.9 / -8.1 / 746,320
- Auckland City (South) / -8.1 / -7.9 / 464,956
- Islands* / -3.9 / -0.9 / 463,357
Manukau (A) # / -7.5 / -7 / 434,648
- Manukau East / -9.7 / -8.2 / 504,211
- Manukau Central / -9.1 / -8.3 / 340,797
- Manukau North West / -2.1 / -2.7 / 420,860
Papakura (A) # / -7.4 / -7.4 / 330,453
Franklin / -2.5 / -2.8 / 383,066
Thames Coromandel / N/A / N/A / N/A
Hauraki* / -1.6 / -2.9 / 246,597
Waikato* / N/A / -12.1 / N/A
Matamata Piako / -1.7 / -4.6 / 288,152
Hamilton # / -9.3 / -8.5 / 337,533
- Hamilton North East / -8.3 / -7.8 / 395,431
- Central City/North West / -11.4 / -10.9 / 310,812
- Hamilton South East / -9.6 / -8.3 / 325,728
- Hamilton South West / -8.7 / -8 / 302,228
Waipa / -5.8 / -5.6 / 328,205
Otorohanga* / -5.7 / -2.2 / 252,333
South Waikato / -5.9 / -4.8 / 151,972
Waitomo* / N/A / N/A / N/A
Taupo* / N/A / N/A / N/A
Western BOP / -7.6 / -3.3 / 422,509
Tauranga # / -9 / -8.4 / 429,370
Rotorua / -11.1 / -10.3 / 251,362
Whakatane / -4 / -5.7 / 320,412
Kawerau* / N/A / -3.7 / N/A
Opotiki* / N/A / N/A / N/A
Gisborne / -5.8 / -9.6 / 255,678
Wairoa* / N/A / N/A / N/A
Hastings / -4.4 / -4.5 / 297,171
Napier # / -8.1 / -5.9 / 325,711
Central Hawkes Bay* / -5.1 / -2.6 / 243,875
New Plymouth / -5.4 / -6 / 305,540
Stratford* / -15 / -10.8 / 167,208
South Taranaki / -5 / -4.8 / 208,697
Ruapehu* / N/A / N/A / N/A
Wanganui / -4.8 / -6.8 / 220,260
Rangitikei* / N/A / N/A / N/A
Manawatu / -9.2 / -9.1 / 239,943
Palmerston North # / -9 / -9 / 280,300
Tararua* / -2.5 / -3.4 / 153,927
Horowhenua / -5.8 / -6 / 236,895
Kapiti Coast / -8.1 / -8.1 / 324,716
Porirua (W) # / -7.6 / -7.6 / 383,474
Upper Hutt (W) # / -9.2 / -8.7 / 321,943
Hutt (W) # / -7.5 / -8.5 / 363,667
Wellington (W) # / -6.2 / -4.4 / 478,750
- Wellington City & Southern Suburbs / -7.5 / -6.1 / 451,476
- Eastern Suburbs / -5.6 / -3.2 / 516,035
- North Wellington / -5.3 / -3.3 / 452,623
- Western Suburbs / -5.8 / -5.3 / 591,667
Masterton* / -13.1 / -13 / 259,453
Carterton* / -7.7 / -10.4 / 251,375
South Wairarapa* / -6.4 / -8.4 / 381,517
Tasman / -5 / -4 / 348,759
Nelson # / -7.6 / -6.2 / 350,593
Marlborough / -8 / -7.9 / 332,463
Kaikoura* / N/A / N/A / N/A
Buller* / 12.6 / 12.7 / 202,900
Grey* / -3 / 2.7 / 201,652
Westland* / 3.2 / N/A / 232,000
Hurunui* / -10.9 / -6.5 / 316,225
Waimakariri / -7.4 / -7.4 / 307,142
Christchurch # / -8 / -7.4 / 348,953
- East / -7.1 / -6.9 / 282,495
- Hills / -9.3 / -6.7 / 435,785
- Central City and North / -8.1 / -8.4 / 411,880
- Southwest / -8.7 / -7.4 / 332,134
- Banks Peninsula* / -12 / -11.8 / 400,833
Selwyn / -5.5 / -3.7 / 360,348
Ashburton / -2.4 / -2.1 / 270,923
Timaru / -4.6 / -3.5 / 232,507
MacKenzie* / N/A / N/A / N/A
Waimate* / 2.7 / 4 / 183,120
Waitaki / 1.9 / 0.3 / 216,803
Central Otago* / -4.5 / -4.2 / 365,078
Queenstown Lakes / -10.6 / -12.5 / 573,273
Dunedin # / -7.7 / -7.6 / 254,263
- Central/Northern City / -4.8 / -5 / 273,576
- Peninsular/Coastal Dunedin* / -6.1 / -1.9 / 222,460
- Southern City / -12.1 / -12.5 / 245,516
- Taieri / -7.3 / -6.1 / 253,740
Clutha* / -0.9 / -1.2 / 156,133
Southland / 5.8 / 4.3 / 244,669
Gore* / 2.2 / 3.6 / 188,071
Invercargill # / -9.1 / -7.7 / 211,105

Total NZ
/ -7.4 / -6.8 / 378,605

Auckland Area (A) / -8 / -7.4 / 489,737
Wellington Area (W) / -6.9 / -6 / 415,811
Main Urban Areas # / -8 / -7.2 / 411,903

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 in 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 in 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 in the previous 3 month period.

ENDS

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