Softening market may be short-lived

Values in the Auckland region have dropped by 0.7% over the last three months, the latest QV House Price Index shows.

In February, the average residential property value in the Auckland region was $925,656. This was down on January’s average value of $928,921.

The Auckland region recorded a 17.8% year-on-year increase, which left values 69.4% over the 2007 market peak.

Once adjusted for inflation, values were up 17.7% year-on-year and are 44.7% higher than in 2007.

QV national spokesperson Andrea Rush said the drop in values is a continuation of the softening in the market seen in response to the introduction of the new tax and LVR measures.

“However, over the past couple of weeks, activity levels have started to pick up across the SuperCity, so it’s possible the drop in values may be short lived.”

Further, while values in central Auckland, the North Shore, Manukau and Waitakere decreased, values in the outer fringe areas of Papakura, Franklin and Rodney have continued to rise.

QV Auckland valuer James Wilson also thought the softening in Auckland’s market might not last.

He said activity levels remain low compared to the first nine months of 2015, but the “wait and see” approach of late last year appears to be subsiding among investors.

In his view, many investors now appear willing to re-enter the market.

“Auction campaigns are still producing lower clearance rates than last year, but post-auction negotiations are proving successful in increasing numbers, attendance is also up and clearance rates are rising.”

Meanwhile, nationwide values have increased.

The average value nationwide hit $556,306 in February, as compared to $556,206 in January.

This was an increase of just 0.1% over the past three months, but of 11.6% year-on-year, and it leaves values 34.3% above the 2007 peak.

Once adjusted for inflation, values were up 11.5% year-on-year and are 14.7% above the 2007 peak.

Rush said that, with the exception of Auckland, values in the main centres have gone up.

For example, there was strong growth in values in Whangarei (up 4.9%), Tauranga (up 7.4%), Hamilton (up 4.6%), Napier (up 4.1%), Wellington (up 4.7%) and Queenstown (up 6.1%) over the past three months.

Values in Christchurch and Dunedin are also rising, but at a much more moderate pace, she said.

“Regional areas within commuting distance to Auckland are also still benefiting from buyers looking for more affordable housing or rental property.

“Values are up more than 5.0% in the Kaipara, Waikato and Hauraki Districts over the past three months.”

Other than Auckland, the only places to see values decrease in the past three months were Stratford in the North Island and Ashburton, Waimate and the West Coast districts of Buller and Grey in the South Island.

Rush added that listings levels remain low in most parts of the country, despite more properties coming onto the market during February.