The latest figures from Quotable Value reflect the pick-up in the housing market, with property values improving across the country.
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Property values in the Auckland region declined by 7.6% over the past year (calculated over the three months ending May 2009 in comparison to the same period last year), an improvement on the 9% annual decline reported in April. The average sale price for the region decreased from $486,986 to $483,397.
"The buoyant mood that started post- Christmas continues, with more groups through open homes, more competitive bids at auction, and the number of days to sell down in general. The net result is the small recovery in values we see in our numbers this month. Agents are anecdotally confirming this and are also reporting that there is a shortage of listings in many areas. Overall there is stronger demand for property from both home-buyers and investors, particularly in the West, including Te Atatu, West Harbour and Titirangi. It would be fair to say that the majority of activity within wider Auckland is in what we describe as the ‘affordable' price bracket, typically under $500,000," QV's Glenda Whitehead said.
"Investors are now focused on getting good cash flow returns, and are no longer buying based on potential capital gains. ‘Home and income' style properties are still very popular, probably due to the extra income taking some pressure off mortgage repayments. Developers are still absent from the market, with demand pressures and pricing not yet attracting them back. They also now face added demands from banks when they apply for funding," Whitehead said.
"While the mood is more positive, winter is now upon us and the wider economic issues have not abated. If buyer demand is maintained over the winter period, and the low listings levels typical of this time of year don't increase, we could potentially see a continued stabilisation of values through into spring. There is still widespread concern around job security, and while lower interest rates are making it easier for some, others remain locked into higher rates. We have also noted that a number of our clients in recent weeks are Kiwi's returning from abroad, some from the UK and Western Australia," Whitehead said.
Property values in Hamilton declined by 7.5% over the past year (calculated over the three months ending May 2009 in comparison to the same period last year), an improvement on the 8.8% annual decline reported in April. The average sale price for the city increased from $335,091 to $346,274.
"For the third consecutive month the rate of annual decline in the Hamilton region's housing market has eased. All four areas in the city experienced this; the Central City/North West Hamilton area from -11.5% in April to -8.7 % in May, the South East from -8.0 % to -7.2 %, the South West from -8.7 to -7.4% and the North East from -7.4% to -6.5%," QV's Richard Allen said.
"This recovery in the rate of annual decline indicates that house prices have flattened out for the time being. Also, we are now comparing back to a year ago, where prices were declining steeply. However, with a reduced dairy payout forecast for the 09/10 season, and the economic recession, I am of the opinion that this may only be an aberration. A potential lack of demand as we enter the winter months could put further downward pressure on residential property prices in Hamilton and the Waikato," Allen said.
Property values in Tauranga declined by 9.4% over the past year (calculated over the three months ending May 2009 in comparison to the same period last year), an improvement on the 9.9% annual decline reported in April. The average sale price decreased from $432,461 to $425,621.
"While the level of activity is more buoyant than it was a few months ago, talk of a prolonged stabilisation of our property market is probably premature. Improvements in the retail, agricultural, business and employment sectors need to take place before a sustainable recovery in the property market can occur," QV's Shayne Donovan-Grammer said.
"Most of the sales I am seeing are at prices which present good value and overall I think values are still slowly falling. The bulk of the activity in the Tauranga region is under the $450,000 bracket with the most action occurring in the $250,000 to $350,000 price range," Donovan-Grammer said.
Property values in the Wellington region declined by 7.4% over the past year (calculated over the three months ending May 2009 in comparison to the same period last year), an improvement on the 8.5% annual decline reported in April. The average sale price for the region remained relatively steady at $424,411.
"From these latest figures it is obvious that the encouraging signs we have seen in the market place over the last couple of months have had a positive affect on values in and around Wellington. Increased buyer interest and enquiry was followed by increased sales volumes, which has now translated into healthier prices. It is of course impossible to tell at this stage whether this is an actual house market recovery in Wellington, or if we will see further falls through winter," QV's Kerry Buckeridge said.
"Of particular interest at the moment is the shortage of listings throughout the Wellington region, which is obviously lending a hand to sale prices. The shortage can anecdotally be attributed to a few factors. Firstly, the pricing gap between the unrealistic sellers of last year and the cheeky buyers of late has all but closed. Pricing expectations are now clearer for buyers and sellers, ultimately resulting in listings being sold. Secondly, there is uncertainty in the market place, so vendors who don't have to sell won't. Lower interest rates are obviously having an affect too, as housing affordability has improved and is bringing first home buyers into the market. It is also worth noting that housing supply traditionally dwindles coming into winter," Buckeridge said.
"More established investors are certainly making a comeback, as the prospect of positive returns is back on the cards. It seems that savvy investors with portfolios are leading the pack, as they are more likely to meet bank lending requirements. For this group of buyers the numbers really have to stack-up. Capital gains aren't too high on the agenda, so rental returns need to make any potential outlay feasible,". Buckeridge said.
Property values in Christchurch declined by 8.1% over the past year (calculated over the three months ending May 2009 in comparison to the same period last year), an improvement on the 9.6% annual decline reported in April. The average sale price for the city decreased slightly from $342,929 to $339,695.
"These annual numbers need to be treated with caution, as the same period last year was a time of decline, measured against the month ending May 2009 which shows a period of flattening. So by default the numbers will show a recovery. It is a positive sign as far as market sentiment goes, but it is still too early to tell whether this 3-month stabilisation is the start of an extended levelling-off period. The small decrease in the average sale price is easily skewed by the mix of property being sold, so although this has limited value, it does reinforce a flattening in the market," QV's Melanie Swallow said.
"Suburban Christchurch has held well, with the central, northern, eastern and hill suburbs all showing an ease in the rate of annual decline. The central and northern suburbs are showing the largest recovery of 2.7%," Swallow said.
"Anecdotal evidence from different market segments suggests the level of activity to be strong under $350,000, which typically represents the entry-level and investor part of the market. This is followed closely by the $350,000 to $600,000 market segment, which generally represents the next step up the property ladder for most people. The market segment of properties priced over $600,000 appears to have the least amount of activity. Again, this needs to be kept in context as it represents a much smaller part of the market overall. Properties over $1,000,000 are very slow to sell in Canterbury at present," Swallow said.
"It seems as though job security is still the key driver behind purchase decisions at present. This lack of security, coupled with the normal seasonal variation, means we expect to see a continuing pattern of consolidation over the winter period," she said.
Dunedin's residential property values decreased by 5.4% over the past year (calculated over the three months ending May 2009 in comparison to the same period last year), a substantial improvement on the 8% annual decline reported in April. The average sale price in Dunedin increased from to $257,160 to $264,180.
"It is good to see an improvement in the QV statistics, which confirms some of the anecdotal evidence of an improvement we have heard over the last couple of months. Values in Dunedin declined rapidly from April to July 2008, while the same period in 2009 has been pretty much static. As a result we are now heading for a period where the year-on-year change is moving back towards zero. Last month we reported that the year-on-year values were worst in the Taieri area. The figures this month show a more even change throughout the city," QV's David Paterson said.
"This improvement in the market which we have witnessed over the last three months is despite some dire predictions from a number of sources. While these statistics are positive, it is too early to say that the market has turned for the foreseeable future. The market is finely balanced and it wouldn't take much to send it into further decline. While affordability has improved markedly over the last year, there is a real concern about job security. This is likely to be the biggest risk to a continued improvement in the property market over the next 12 months," Paterson said.
"Agents are reporting some improvement in the market, although there is a shortage of listings. This may be because of the time of the year, or it could still indicate sellers have unrealistic price expectations and have decided to hold off selling until prices improve. The weather in May was very wet and cold and it will be interesting to see what impact it has had on the May sales figures," he said.