Property values increase as sales decline

House values fell 7.1% in the 12 months ended June 30, compared to an 8.1% decline in the period through April, according to QV Valuations, marking the third consecutive monthly improvement. The average sale price rose to $378,535 last month, from $371,555 in May.

"Historically low mortgage interest rates have led to improved optimism and encouraged more buyers back into the market," said spokeswoman Glenda Whitehead. "Potential sellers are holding back and waiting for values to increase again."

Last month, Reserve Bank Governor Alan Bollard warned the economy faces risks if signs of stabilisation in the housing market are taken as the portent of another boom, and spurs another cycle of borrowing and consumer spending. Rising net migration and a shortage of housing has stoked optimism of a revival in the property sector.

QV's Whitehead said concerns over job security, recent hikes in mortgage rates and tighter lending criteria could curb recent buyer enthusiasm.

The government valuation agency said there had been an increase in the number of people intending to buy property in the coming year, but fewer people intending to sell, and that this changing balance in sentiment will "shape the market over the coming months."

In Auckland, property values continued to slow their annual decline to 5.9% in a rolling three month period ending June 31, from 7.6% in May, while the average sale price gained to $489,444 from $483,397. Hamilton property values improved to a 6.6% decline in the three months ended in May from 7.5% the month before. The average price fell to $337,851 from $346,274.

Tauranga property values fell 8% from a 9.4% drop in the previous period, as the average sale price advanced to $427,927 from $425,621. In Wellington, values fell 6.5% slowing from the 7.4% annual decline reported in April. The average sale price increased to $430,939 from $424,411.

Christchurch property values fell 7.3% from 8.1%, with the average sale price little changed at $339,695.

Dunedin property values fell 4.5% in the three months through June from a year earlier, from the 5.4% annual decline in the period through April. The average sale price fell to $256,493 from $264,180.