QV commentary shows Wellington still on top

Monday 11 February 2008

Wellington has again shown the best house price growth of all the main urban centres in the latest period, according to the latest Quotable Value statistics.

By The Landlord

Main Urban Area Commentaries
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All statistics are calculated over the three month period ending January 2008 in comparison to the same period last year.

Property values in the Auckland region increased by 9.6% over the past year. The average sale price for the region was $507,728, down on $511,188 recorded last month.

"With such a brilliant summer being dished up, there seems to be little focus on the property market in Auckland at present. The predicted easing in growth rates continues in all areas of greater Auckland with the exception of Franklin," said Glenda Whitehead of QV Valuations.

"Average sale prices have varied on levels reported last month to varying degrees. Overall activity has been sluggish, with those properties on the market sitting longer than what we have been used to" said Whitehead.

"Our valuers report that the sales taking place are those with realistic asking prices. Sales by auction have reduced and tend to be for more premium properties. The number of properties actually on the market seems to be growing after a period of low levels of listings and low numbers of sales. Overall it's been a quiet market during the holiday period with buyers remaining cautious" said Whitehead.

Property values in Hamilton increased by 8.3% over the past year. The average sale price for the city was $363,261 down from $364,013 in December 2007.

"This is now the third consecutive month where Hamilton residential property growth has slowed. All four quarters of the city have seen significant declines in property value growth. The Central City/North West quarter has been significantly impacted. Growth has fallen by 4.1% from 10.5% in December 2007 to 6.4% in January 2008. The total number of sales is significantly down from this time last year, a good indication of reduced confidence in the residential property market," said Greg Petersen of QV Valuations.

"Real estate agents appear to have plenty of listings, although anecdotal evidence suggests that properties are staying on the market longer. The limited number of buyers in the market are able to be more discerning before purchasing. This is probably most true of Hamilton’s North East quarter where the average sale price has dropped by $14,262 to $436,192, the second major decrease for this area in the last couple of months," said Petersen.

"As the cumulative effects of higher interest rates, and higher grocery and fuel prices take their toll on the weekly budget, demand for residential property has eased back and it is clear that we are now in a buyers market," said Petersen.

Property values in Tauranga City increased by 3.4%, down on the 5.0% reported for December 2007. The average sale price for the city was $444,022, which remains more or less unchanged on last month's figure of $443,399.

"In the Western Bay of Plenty district the rate of property value increase for January is 0.3%, down from 1.8% for December. The average sale price for properties sold in the Western Bay of Plenty district for January is $471,716," said Russell Oliver of QV Valuations.

"The property market in the Tauranga region continues to be quiet. The rate of increase in property values in both Tauranga City and the Western Bay of Plenty district has been steadily tracking downwards since September 2007," said Oliver.

Property values in the Wellington region increased by 11.0% over the past year, down from 12.1% reported last month. The average sale price for the region increased from $438,416 last month to $445,859 this month.

"Property value growth in the Wellington area is easing back steadily, but remains at historically high levels. Most areas are now heading back to pre-2006 levels when a 10.0% year on year increase was rare. The region is now at 11.0% and trending down. This is expected to continue for a few more months yet as the number of sales is noticeably lower and selling times are increasing, signalling a shift from a sellers market to a buyers market," said Max Meyers of QV Valuations.

"All areas are showing lower percentage increases. The biggest increase in value growth was in Upper Hutt at 13.0%, down from a maximum of 21.0% last year. The lowest increase was 10.2% in the North Wellington area and represents the lowest year on year growth since February 2005," said Meyers.

"Average prices have increased in some areas with the Eastern suburbs showing the largest increase of $32,295 to $567,336. Wellington City and Southern suburbs showed a decline of $6,848. The Western Suburbs showing the highest average price of $590,914 some $75,000 higher than the same time last year," said Meyers.

Property values in Christchurch increased by 6.9% over the past year, down from 8.2% reported last month and 9.9% recorded in November. The average sale price for the city increased by $5,769 to $367,681 from $361,912 reported in December 2007.

"Economic factors are still working against the housing market and this is reflected in another month of easing growth rates," said Richard Kolff of QV Valuations.

"Sustained pressures such as high fuel and food prices and the Reserve Bank holding up the Official Cash Rate are resulting in a slowdown. The fact that we are still seeing an annual growth rate locally ranging from 6.9% in Christchurch to 13.5% in Ashburton shows the underlying strength of the property market. However this is being tested as buyers respond to changing market expectations and negotiate a lot harder with vendors," said Kolff.

"Property owners that have low discretionary income, or who have highly geared investment property portfolios, are struggling as they come off a fixed term and have to re-negotiate to a much higher mortgage interest rate. Already this month we have seen some properties go to mortgagee sale and this is likely to become more prevalent as the year progresses," said Kolff.

"Areas topping the annual growth rate charts are Banks Peninsula on 12.8% and Hurunui on 12.4% (both on a low turnover of sales), those at the lower end were the Christchurch Eastern and Hill suburbs with 6.9% and 7.3% respectively," said Kolff.

Dunedin’s residential property values increased by 6.1% over the past year, down from 6.9% reported last month. The average sale price in Dunedin was $279,358.

"Growth is reasonably consistent across the city with value growth continuing to level off and following a trend that started in August last year. With this expected downward trend forecast since the interest rate rises in the early part of last year. Price increases for food, fuel and other necessities have put further pressure on home affordability," said David Paterson of QV Valuations.

"The number of property listings continues to grow; as a result there is a lot more choice for buyers. Demand continues to ease with agents reporting that the market is now in the buyers favour. There is a feeling that these conditions will result in a market correction of value levels in the months ahead," said Paterson.


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