Property values returning to 2008 levels

New Zealand property values improved for the fourth month in a row as vendors were under less pressure to sell to the first available buyer and could afford to wait for a better offer.

House values fell 2.8% in the 12 months ended August 31, up from a 5% decline in the period through July, according to QV Valuations.

The average sale price climbed 0.7% to $385,426 last month from a month earlier. “Rather than feeling the need to accept a very low offer, many (owners) can now afford to hold out for the next buyer,” said spokeswoman Glenda Whitehead.

“In most areas there are now many buyers actively searching for properties.”

The housing market has been bubbling for several months as rising net migration and dwindling building consents combine to stoke demand for property in the face of a limited supply, and the national median price stabilised last month, according to data from the Real Estate Institute.

Still, Whitehead said it’s unlikely the recent increases are the makings of a new boom. “We believe that the recent increases in property values are a temporary surge caused by the imbalance between motivated buyers and a shortage of quality properties,” she said.

Reserve Bank Governor Alan Bollard will review the official cash rate on Thursday and is predicted to keep rates at a record-low 2.5% and reiterate low rates until late next year.

The pick-up in the property market has some economists betting Bollard can’t cut rates further for fear of reigniting a housing bubble.

In Auckland, property values continued to slow their annual decline to 1.5% in a rolling three month period ending August 31 from 3.5% in July, while the average sale price gained to $502,022 from $500,315.

Hamilton property values gained 0.1% in the three months ended in August from a 2.9% decline the month before. The average price fell to $339,298 from $344,081.

Tauranga property values fell 4.1% in August from a 6.6% drop in the previous period, as the average sale price retreated to $412,320 from $415,156.

In Wellington, values fell 1.4% in the rolling three month period, slowing from the 4% annual decline reported in July. The average sale price edged up to $431,614 from $429,571. Christchurch property values fell 1.9% from a 5.5% decline, with the average sale price gaining to $344,401 from $342,993.

Dunedin property values gained 0.4% in the three months through August from a year earlier, from the 1.4% annual decline in the period through July. The average sale price slipped to $254,619 from $258,813.

To see how your region has done click here.