Property values continue to ease

13 July, 2010

Property values across New Zealand have continued to slide in recent months according to the QV residential property indices for June.

Values are still above the same time last year due to increases in the second half of 2009, but the recent declines are closing the gap. Values are now 5.2 percent above last year, down from the 5.6 percent reported last month.

While values have declined according to the index, the average sales price increased very slightly from $403,070 to $404,715. This is due to a change in composition of the sales taking place, and shows the unreliability of using average sales prices to measure value change.

Glenda Whitehead of QV Valuations said “the number of sales transactions remains at relatively low levels and are currently around 20 percent below the long term average. There is typically a decline in sales activity at this time of the year as winter sets in”.

Whitehead said “there also appears to have been an easing in the number of new properties coming on to the market, which is a normal trend for this time of the year. There is still plenty of choice for the few buyers actively searching”.

“There is no evidence so far that the budget has had any dramatic impact on the property market. Any changes, if they are to happen, will likely take effect over the next twelve months as the various tax changes are implemented, and will also depend on whether investors decide to sell as a result of the changes”.

Whitehead said “buyers continue to be very cautious and selective in their purchasing decisions. Properties with perceived flaws such as structural problems, or poor maintenance, or perhaps at a greater distance from town, are proving harder to sell”.

“There are still sellers who have unrealistic price expectations in the face of present slow market conditions. These properties are being bypassed by purchasers, whereas those priced appropriately are more likely to attract attention”.

“Distressed sales are still having an impact on the market. The effect is that where they are available, and potentially cheaper than non-stressed sales, they are subduing price levels in those areas” said Whitehead.

In most of the main centres values have declined in recent months, and while still above last year, the gap is closing.

Across the Auckland area values are 7.9 percent above last year, down from the 8.8 percent reported last month. The Wellington area has also slipped to 4.1 percent and Christchurch to 5.9 percent.

In contrast to the other main centres, both Hamilton and Tauranga showed a slight increase in the gap between values this year and last year. This reflects that values in both cities have been relatively static for most of the last twelve months, with neither showing any significant increase in the second half of 2009 like the rest of the main centres did.

The gap in values over the last year has also grown in Dunedin from 4.8 percent reported last month to 5.8 percent this month. Unlike most of the other main centres values in Dunedin have not consistently decreased in recent months.

The gap in values over the last year is also closing in most provincial centres due to declining values in recent months.

Whangarei (-1.1 percent), Rotorua (-2.1 percent) and Gisborne (-0.9 percent) all have values below the same time last year.

New Plymouth (6.2 percent), Palmerston North (4.9 percent), Nelson (5.1 percent) and Invercargill (4.3 percent) are still above last year, but the gap is closing.

Wanganui (2.3 percent) and Queenstown Lakes (0.8 percent) are only slightly above last year.

Values in Napier have continued to consistently increase in recent months and remain 6.4 percent above last year.

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