Main urban areas commentary: QV

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Auckland
Hamilton
Tauranga
Wellington
Christchurch
Dunedin

Auckland

Property values in the Auckland region declined by 7.7% over the past year (calculated over the three months ending October 2008 in comparison to the same period last year), down further from the 7% decline recorded in September. The average sale price for the region increased slightly to $498,383.

Rodney is -3.5% year on year, North Shore -6.4%, Waitakere -7%, Auckland -8.4%, Manukau -8.7%, Papakura -4.9% and Franklin -2.5%. “The rate of decline occurring across the region has slowed which is encouraging, but the fact remains that there is still a year on year decrease of 7.7%” said Glenda Whitehead of QV Valuations.

“Sales numbers remain low, however there does seem to be a little more action developing in the market place. We have had reports of solid buyer enquiries at open homes, which is not something we have seen this year. The decrease in the interest rate is seen as positive, which may be feeding this extra activity we are seeing.  New listings are now evident in parts of the market. This may be a delayed spring run, or reality and need are beginning to set in” she said.

“Activity around Auckland remains patchy, with the mid to upper end of the market attracting more buyer attention than the lower end.  This could be due to the higher buyer confidence levels and their ability to obtain finance. At the lower end of the market, some first home buyers attracted by lower values are hamstrung by the need for a larger deposit due to the more stringent bank requirements” Glenda said.

“The activity in the investor sector of the market is fuelled by financially burdened players trying to exit. On the other hand, established investors are making cheeky offers in an attempt to secure a good rental return” said Glenda. 

Hamilton

Property values in Hamilton declined by 9% over the past year (calculated over the three months ending October 2008 in comparison to the same period last year), down further from the 8.8% decline recorded in September. The average sale price for the city declined to $349,253.

“Although the downward trend in property values continued, the rate of the decline was far less dramatic than it has been in previous months. The fact remains though, values are now 9% less than they were only a year ago” said Richard Allen of QV Valuations.

Central City/North West Hamilton was the only area of the city where property values declined at a faster rate, decreasing from -9.9% in September to -11.2% in October. North East Hamilton declined -7.7% year on year, the South East -9.7% and the South West -8.7%.

“Is the slowing rate of decline an indication that house values in Hamilton City may be leveling off, or is it just a slight aberration? Unfortunately it is still most likely the latter, as a continued lack of confidence in the property market continues to curb demand and dampen prices. I think the downward trend is likely to continue in the short term,” Allen said.

“The anecdotal evidence I have suggests that the market continues to strongly favor buyers, and that some properties are still selling at reduced prices. The average sale price for the city retreated from $353,465 in September to $349,253 October, well above the 18 month low of $335,292 in August 2008” said Allen.

Tauranga

Property values in Tauranga declined by 7.9% over the past year (calculated over the three months ending October 2008 in comparison to the same period last year), down from the 7.6% decline reported last month. The average sale price decreased to $436,765.

“There are no signs of a Spring improvement in the Tauranga property market. Sales volumes remain low as many buyers believe prices are going to drop further in the coming months. The properties that are selling present characteristics to the buyer which are exactly what they are looking for, as long as the property is marketed at a realistic asking price” said Shayne Donovan-Grammer of QV Valuations.

“The drop in interest rates is certainly welcomed, but needs to drop further to stimulate the property market. Recent interest rate drops have buffered the increased cost of living but aren’t substantial enough to reignite activity. In order to kick start the property market, several ingredients are required. These include; a belief that the credit crisis is over; a higher degree of perceived job security; and lower interest rates. When that will occur, is the big question” said Donovan-Grammer.

Wellington

Property values in the Wellington region decreased by 6.1% over the past year (calculated over the three months ending October 2008 in comparison to the same period last year), down from 5.4% decline reported last month. The average sale price for the region decreased to $411,228 from $424,098 in September.

“The pattern of declining values and average prices is clear and persistent.  The expected surge of Spring activity has not arrived and this is certainly not helped by the current financial circumstances.  However, there are some reports from Real Estate agents that there is a lift in buyer enquiries from both the bargain hunters and home owners who don’t want to wait any longer” said Max Meyers of QV Valuations.

“The biggest decline in property values across the Wellington region occurred in Lower Hutt with -9.2% year on year, and the smallest in North Wellington with -3.9%. Within our region, some areas show a stark contrast in property value growth with that reported a year ago. Upper Hutt has moved from 19.8% (year on year) growth in October 2007 to a 7.2% (year on year) decline in October 2008. Lower Hutt has moved from 19.9% (year on year) growth in October 2007 to a 9.2% (year on year) decline in October 2008” said Meyers.

The market movement is clearly shown by the table below, where a significant proportion of sales around Wellington achieved a price lower than the 2007 council rating values.

“Looking ahead I see the current trend continuing into the New Year, while buyers take full advantage of attractive buying opportunities” said Meyers. 

Christchurch

Property values in Christchurch decreased by 7.8% over the last year (calculated over the three months ending October 2008 in comparison to the same period last year) down from the 7.1% annual decline reported last month. The average sale price for the city decreased to $354,691 for October, a decrease of $1,666 from September.

“Property values are still sliding although the rate of decline appears to be easing.  There are mixed signals from the different price brackets within the market. At the top end there are more properties available for sale and limited buyer interest.  Yet well priced and well presented mid-range properties sometimes attract multiple offers” said local QV Valuations manager Mark Dow.

“The supply of rental accommodation has been steadily increasing across the city as home owners elect to rent out their properties rather sell in the current climate.  This increased supply and the corresponding lack of demand have resulted in the inevitable easing of rentals in most parts of the city. The only real exception to this has been in the popular student accommodation areas” he said.

“Traditionally school holidays are a little quieter in the real estate market, as is the period leading up to an election.  These factors, combined with the current poor housing and economic climate, have quashed the usual Spring activity.  Even though school holidays and the elections are now behind us, it is likely that the usual heightened activity leading up to Summer will be subdued” Dow said.

Dunedin

Dunedin’s residential property values decreased by 8.2% over the past year (calculated over the three months ending October 2008 in comparison to the same period last year), a slight improvement on the 8.5% decline reported in September. The average sale price in Dunedin decreased to $257,950.

As reported last month, the Southern City had the greatest rate of the decline. This trend has continued this month, with value growth declining 12% on the same period last year. In contrast, the Taieri and Central/Northern City decreased by 6.5% and 6.8% respectively over the same period, while the Peninsula/Coastal area decreased by 3.2%.

“Consistent with what we reported over the last two months, there has been some levelling off in the rate of decline in the market. Dunedin has actually shown a slight reduction in the rate of decline from 8.5% last month to 8.2% this month. While this is encouraging, the plain fact is that values are still declining albeit at a slower rate” said David Paterson of QV Valuations.

“There is still obvious uncertainty in the market, with buyers showing reluctance to take the plunge. There are reports of purchasers making ‘cheeky’ offers in the hope of getting more than a good bargain. It is clear from some of the sales we are seeing that there are good deals out there, and the prices achieved are well below initial purchase prices” Paterson said.

Some examples of sales like this include:

“Another measure that is often quoted is the relationship between the sale price and the rating values. In Dunedin the rating values were completed as at 1 July 2007. QV’s October statistics show that approximately 80% of residential sales are below the 2007 rating values. On average the properties are selling at approximately 10% below the rating values” said Mr Paterson.

“An early indicator for property market improvement is an increase in the number of sales. This is yet to happen in Dunedin. The fact that we have not seen the usual spring flush of sales is of some concern, reinforcing the thought that the market has not yet bottomed out” Mr Paterson said.

“We can expect prices to continue the downward trend of previous months in the short term, followed with a sustained period of little or no growth that could last for many months, or even years” Paterson said.