Property values returning to 2008 levels

Monday 07 September, 2009

Property values are rapidly returning to last year’s levels according to the QV national residential property indices for August released today. Values are now only 2.8 percent below this time last year, a further improvement from the -5.0 percent reported last month.

The value declines seen throughout 2008 have been partially recovered by four consecutive months of value increases, with nationwide values now 1.9 percent higher than they were in April 2009.

Despite these recent rises, nationwide values are still 7.9 percent below their peak of late 2007.

The national average sale price also increased further to $385,426 in August from $382,758 in July.

QV Valuation Manager Glenda Whitehead said that sales activity throughout August was solid and has picked up from the lows of mid winter. The number of sales is also up from last year when they were at historical lows.

“The increase is typical for this time of the year as the number of listings and sales begin to pick up heading towards spring. Balmy temperatures no doubt also helped” said Whitehead.

Whitehead said “the housing market is strongly driven by confidence, and that appears to be returning to the wider market. In most areas there are now many buyers actively searching for properties.

However, a general shortage of listings is leading to increased competition amongst buyers and is resulting in quality properties selling quickly and prices being pushed up. This is in stark contrast to last year when there were plenty of properties on the market but few buyers” Whitehead added.

“For many vendors, the urgency to sell has eased. Rather than feeling the need to accept a very low offer, many can now afford to hold out for the next buyer and a more realistic price. For other property owners the financial pressures are too much and we continue to see properties under mortgagee sale coming to the market” said Whitehead.

It is unlikely that the recent increase in values signals the beginning of another 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 available for them to buy. If more properties come onto the market in spring as expected, then this imbalance could be corrected and values should stabilise” said Whitehead.

“Although there has been an improvement in market sentiment, continuing doubts over job security, a lack of wage growth and tougher lending conditions are likely to limit increases in the medium term” Whitehead added.

All the main centres have increased in value over the last quarter, leading to a further improvement in the annual change. Values in both the Auckland area and Christchurch are -1.9 percent compared to the same time last year. Tauranga is now at -4.1 percent, and the Wellington area -0.1 percent. Hamilton at 0.1 percent and Dunedin at 0.4 percent are the first of the main centres to now have values above the same time last year. Despite these recent gains, values in most of the main centres are still 7 to 9 percent below their peak.

Most of the provincial centres have also shown less annual decline than was reported last month. Whangarei is now at -6.5 percent compared to last year, Gisborne is at 9.4 percent, Napier and Hastings are both at 4.2 percent, Wanganui at -3.5 percent, Palmerston North at -1.5 percent, Nelson at 1.0 percent, and Invercargill at -2.7 percent. Rotorua has slid back slightly further to -8.4 percent compared to last year, as has Queenstown Lakes at -6.1 percent.

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