Wellington house prices hold up best

Main Urban Areas Commentary
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Auckland
Hamilton
Tauranga
Wellington
Christchurch
Dunedin

All figures are calculated over the three months ending April 2008, in comparison to the same period last year.

Auckland
Property values in the Auckland region increased by 4.7% over the past year. The average sale price for the region decreased to $508,043 compared to $516,253 recorded last month.

"Annual growth rates have continued to ease, but at this stage average property values across the Auckland region are still ahead of where they were this time last year, but for how much longer we can't say. Given what we are seeing in the market at present, we suggest growth rates will continue to pull back," said Glenda Whitehead of QV Valuations.

In some areas of Auckland, such as Waitakere City, auctions are no longer the preferred marketing tool, with vendors using asking prices to attract buyers. Some investors struggling to make the returns required to meet current interest rates are attempting to sell properties purchased just two or three years ago, and when all costs are considered are likely to realize little if any capital gain over that time. Other well placed investors are out searching for bargains," she said.

"Within wider south Auckland, activity levels remain higher at the lower end of the market, while properties over $500,000 are sitting on the market for longer. Vendors who need to sell are adjusting both their expectations and asking prices," said Whitehead.

"The use of urgent and distressed terminology, such as 'vendor must sell', 'mortgagee sale' and 'all offers considered' in advertising of real estate continues to attract bargain hunters, and very low offers. Vendors should carefully instruct their agents on this matter, to ensure their properties are not exposed in an un-favorable light," she said.

"Within Auckland City, quality properties in traditionally highly sought-after suburbs, such as Remuera, are taking longer to sell, but continue to achieve good prices. On the other hand we have had reports of well situated properties purchased as do-ups, and now renovated that are unlikely to recover the project costs. Increasing building, compliance and finance costs have been impacting on the market for quite some time now. However, we are now hearing of reducing building costs as workload reduces."


Hamilton
Property values in Hamilton increased by 2.3% over the past year. The average sale price for the city was $362,252, up slightly from the $359,668 recorded in March.

"The continued decline in sales volumes, a good supply of properties on the market, the impact of increasing interest rates and decreasing immigration continued to cause growth in residential property values in the city to slow. Annual property value growth continued to slide reaffirming the downward trend we have seen in the early part of 2008" said Richard Allen of QV Valuations.

"The significant decreases in annual growth that we have seen over the last couple of months continued for all parts of the city, decreasing to 2.3% from 3.4% in March. The Central City/North West area of Hamilton decreased to 2.0%, the South West 1.8%, Hamilton North East to 2.4% and South East Hamilton to 1.1%," he said.

"Interestingly the decline in the average sale prices in the city that has occurred over the last four months did not occur in April with a slight recovery to $362,252. With demand continuing to soften in most areas it will be interesting to see what impact the downward pressure will have on the average sale price in the next couple of months. At this stage expectations and the general feeling is that sale prices are likely to fall a little more before leveling out," said Allen.


Tauranga
Tauranga's residential property values increased by 3.5% over the past year, down slightly from the 3.7% reported last month. The average sale price in Tauranga increased to $438,986.

"In Tauranga there is an increasing oversupply of properties on the market as a result of a low number of sales," said Shayne Donovan-Grammer.

"The discounting of property asking prices is starting to become more prevalent. There is currently a genuine lack of interest in property in most locations and categories. While it is certainly not a sellers market, buyers still have to look at a number of homes before they find one that where the sellers price expectations are realistic," he said.

"Apartments and new townhouses continue to decline in popularity and buyers simply cannot be found for this property category at the moment. Vendors who bought an apartment off plans two to three years are struggling to get their original purchase price," said Donovan-Grammer.


Wellington
Property values in the Wellington region increased by 5.6% over the past year, down from 8.1% reported last month. The average sale price for the region decreased to $438,292 from $440,483 in March.

"The easing trend in the market is now very apparent and is likely to persist for a few months yet. Annual value increases are slowing significantly in all areas and the current growth of 5.6% is the lowest for three years and more than 10 percentage points less than the peak of 16.5% only eight months ago in August 2007. The highest growth in values is in Upper Hutt at 7.4%, and the lowest is in the Western Suburbs at 3.7%," said QV Valuations' Max Meyers.

"The easing trend is affecting all areas and price ranges, but not to the same extent. There is still reasonable buyer interest but greater choice means more negotiation. Good properties are holding their value, but buyers are sensitive to price, location and the standard of the property," he said.

"We expect the market to follow the typical winter pattern over the coming months with the number of sales reducing further and even longer selling times. This could mean that by August we will see prices decreasing compared to the same period last year. However, these declines may not last long as the traditional Spring surge leading to firmer prices may again commence in October," said Meyers.


Christchurch
Property values increased by 4.6% in Christchurch over the last year, down from 5.8% reported last month. The average sale price for the city declined slightly from March, being $362,249 in April.

While the market movement is still positive, the year on year growth has been constantly declining from August 2007 when the annual growth rate was 14.1%. Most of the growth reflected in the current period generally occurred in 2007 with 2008 being fairly flat.

"It is not all doom and gloom for the property market, while sales volumes are well down on a year ago and selling periods are longer, prices are showing resilience with many properties holding their own. The softening of the housing market is particularly affecting higher priced properties and ones with less attractive features. It is important to have your property well presented and well priced in the current market. While market prices could currently be described as flat, downward pressure on prices won't subside until sales volumes improve," said Mark Dow of QV Valuations.

"Market confidence has been shaken and buyer and seller expectations are often still too far apart. The buyers are concerned about where the market might be at in six months time and have been slow to make purchasing decisions while they perceive a risk to be present. This caution is likely to continue over the winter months," said Dow.


Dunedin
Dunedin's residential property values decreased by -0.1% over the past year, down from 2.2% reported last month. The average sale price in Dunedin was $272,361.

"There has been a continuation of the easing in the QV value growth index to a point where it is now negative for the first time since the start of the index in May 2004. There is no evidence to suggest this trend will change in the short term as we move into the traditionally quiet winter period," said David Paterson of QV Valuations.

"Last month we reported negative growth in the southern part of the city. This trend has continued with the April index showing -3.5% growth. This area is popular with investors and first home buyers and it is perhaps an indication that they are holding off making purchasing decisions until the market settles," he said.

"There are still a significant number of listings providing good choice to prospective purchasers. Agents are reporting little interest in open homes, however there has been a significant increase in the use of the internet to assess the properties on the market. Properties that are realistically priced are still selling, with most activity in the $250,000 to $300,000 range," said Paterson.