Urban area commentary - June 2009

To view the main regions quickly, use the links below:
Auckland
Hamilton
Tauranga
Wellington
Christchurch
Dunedin

Auckland

Property values in the Auckland region declined by 5.9% over the past year (calculated over the three months ending June 2009 in comparison to the same period last year), an improvement on the 7.6% annual decline reported in May. The average sale price for the region increased from $483,397 to $489,444.

Glenda Whitehead of QV Valuations said; "Steady as she goes, or more of the same, whichever way we say it, it should be seen as positive given the continuing uncertainty within wider economic indicators.

"More balanced pricing conditions are providing purchasers and vendors with a greater degree of certainty. While low listing levels increase the focus on what is for sale, buyers' caution and finance issues are leading the market into calmer waters. It is widely accepted that we are unlikely to see any significant capital gain in the short to medium term, so buyers are not pricing this into their offers. Likewise, investors are buying on cash-flow.

"Securing finance is key to many deals eventuating and it seems as though prices achieved depend on the ability of parties to negotiate. Job security is still creating uncertainty so people are not committing beyond their means".

"Quality properties are attracting good interest, while poorly presented homes sit until asking prices are reduced. Mortgagee sales continue to impact on the market place, with some reportedly selling well, while others sell at substantial discounts when poor presentation and general uncertainty comes into play," said Whitehead.

"On another positive note we are seeing more activity in the medium price bracket in Auckland over $500,000, in suburbs such as Ellerslie and Mt Eden. This could indicate that the trading-up option represents good value, or perhaps reflects a greater degree of confidence by those selling and buying within that value range.

"As listings are limited in many areas, we are seeing multi-offer situations and good activity at open homes. This lack of stock could be attributed to winter, as many people choose not to sell when their property does not look its best.  

"Let's also not forget that it costs to sell, and if equity levels are low following the recent drop in values, selling costs only reduce equity further. For many staying-put is more palatable, as long as mortgage repayments can be met" said Whitehead.

Hamilton

Property values in Hamilton declined by 6.6% over the past year (calculated over the three months ending June 2009 in comparison to the same period last year), an improvement on the 7.5% annual decline reported in May. The average sale price for the city decreased from $346,274 to $337,851.

Richard Allen of QV Valuations said; "For the forth consecutive month the rate of annual decline in the Hamilton region's housing market has recovered slightly. The 0.9% improvement from May is further evidence that the market has stabilised over the last quarter. The exception to the rule was North East Hamilton which showed a 6.6% annual decline in June, a similar level to that reported in May," said Allen.

"This continued recovery in our figures for the city confirms our comments from last month that house prices have flattened. However, as stated last month, I am of the opinion that this stabilisation may only be an aberration, and that a lack of demand as we progress further into winter will put more downward pressure on residential property prices in Hamilton and the Waikato," he said.

Tauranga

Property values in Tauranga declined by 8.0% over the past year (calculated over the three months ending June 2009 in comparison to the same period last year), an improvement on the 9.4% annual decline reported in May. The average sale price for the region increased slightly from $425,621 to $427,927.

Russell Oliver of QV Valuations said; "Although the market stabilisation we have experienced in the last few months has continued into June, the macro-economic environment could undo this pretty quickly. There is still a bleak outlook for agricultural and employment sectors and it will be interesting to see how this affects values for the rest of the year".

"Acting in the favour of property values and helping the current stability is the lack of listings available. It seems to be a country-wide phenomenon which has not overlooked Tauranga. For those who do list there seems to be a commitment to meet the market.

On the buyers' side there may be the perception that the market has levelled which is fuelling their willingness to buy. This being said, there is still a great deal of pressure and uncertainty on a lot of folk, which I believe will hinder any prolonged recovery in the near future," said Oliver.

Wellington

Property values in the Wellington region declined by 6.5% over the past year (calculated over the three months ending June 2009 in comparison to the same period last year), an improvement on the 7.4% annual decline reported in May. The average sale price for the region increased from $424,411 to $430,939.

Pieter Geill of QV Valuations said; "The continued stabilisation of Wellington's residential property prices is following the trend of the last couple of months. It is probably due to the undersupply we have seen and are still seeing across most sectors of the market.

There appears to be a surplus of buyers over vendors, which is attracting multiple offers on some properties. At times this is resulting in much healthier prices compared to late last year and early this year. It is very hard to generalise this across the whole market however, as competition amongst buyers is inconsistent".

"Investors are active but sticking to their guns and only buying if the numbers stack up. Starting with the required return on investment and then working backwards towards an offer seems to be a common tactic. If an offer does result it is normally on a take-it-or-leave-it basis, with emotion taking a back-seat in the process," Geill said.

"While many people feel that we will see further falls in value through winter, current indicators point to it being a good time to sell because of the limited competition out there.

"In saying this, there are still good buying opportunities as we are seeing moderate volumes of mortgagee sales entering the market alongside other opportunities.

"Predictions of increasing unemployment levels may exacerbate the situation so while we are talking of this continued stabilisation, there are wider economic factors at play which may tip the balance either way," he said.

Christchurch

Property values in Christchurch declined by 7.3% over the past year (calculated over the three months ending June 2009 in comparison to the same period last year), an improvement on the 8.1% annual decline reported in May. The average sale price for the city remained steady at $339,962.

Melanie Swallow of QV Valuations said; "These numbers need to be treated with caution as the same period last year was a time of decline, measured against the month ending June which shows a period of flattening. However, it can still be viewed as a positive sign as far as market sentiment goes".   

"Suburban Christchurch has held well, with the central, northern, eastern and hill suburbs all showing a slight improvement year-on-year. The hill suburbs have shown the largest recovery and are closely followed by the eastern suburbs" said Swallow.

"The market is now showing clear segmentation in the level of activity. Over 90% of the sales which occurred in June were in the under $500,000 price bracket, with most of those actually occurring under $300,000. In this sector of the market anecdotal evidence from real estate agents also shows multi offer situations, good success at auctions and an overall shortage of listings.

"Properties over $500,000 are slow in general, with the top end properties over $1,000,000 extremely slow to move. The lifestyle property market has also shown continued signs of softening. Again, job security appears to be a key driver in purchasing decisions," said Swallow.

Dunedin

Property values in Dunedin decreased by 4.5% over the past year (calculated over the three months ending June 2009 in comparison to the same period last year), an improvement on the 5.4% annual decline reported in May. The average sale price in Dunedin decreased from $264,180 to $256,493.

David Paterson of QV Valuations said; "The figures reflect a continuation in the trend reported over the last three months. When analysing monthly value changes, Dunedin City may be showing the first signs of a slight upturn in values and it appears to be ahead of the other main centres in this regard. This may well be because the decline started earlier and was more abrupt in Otago than in other centres".  

"While the improvement outlined in the figures is positive, the wider economic forces make it very difficult to say whether this trend will continue through the winter period.

"While the figures do indicate prices have reached a plateau, there are still commentators suggesting values could drop further over the next 12 months. This type of comment, along with concern about long-term job security, has resulted in many potential buyers staying out of the market for the time being," Paterson said.