Buyers cautious as activity remains subdued

09 September, 2010

Property values across New Zealand have continued the gradual decline seen over the last few months according to the QV residential property indices for August.

Values have dropped 1.1% since March this year after rising 4.3% in the previous seven months. As a result, values are still 3.1% above the same time last year, but the gap is continuing to close. Values are now 5.0% below the market peak of late 2007.

“The market sentiment remains cautious with little sign of urgency amongst buyers. There is still a considerable backlog of unsold property on the market, although the number of new properties being added to this pool appears to have slowed as potential vendors choose to wait until the market begins to show signs of recovery. Those with properties currently on the market now accept that they will take longer to sell, although they are not dramatically dropping their asking prices” said Whitehead.

“The volume of house sales continues to be at relatively low levels, as has been the case for several months now. While the number of sales is still slightly above the same time in 2008 during the worst of the recession, they are well below last year and the long term average” said QV Valuation Manager Glenda Whitehead.

“Some potential buyers are continuing to struggle to secure funding from banks or finance companies who remain cautious about lending for property” said Whitehead.

“The continued lack of buyer urgency, the low number of sales, and the high number of unsold properties means that prices continue to gently slide backwards in most areas” said Whitehead.

Whitehead said “there are early signs of a slight increase in activity as more people are assessing the market and considering their options. The housing market is usually more active in spring although the current economic climate suggests any upsurge this year will be modest. Short of any fundamental change in the market, values are expected to continue to slide slightly”

“The Christchurch earthquake is obviously going to have a major impact on the housing market in that area. It is still too early to tell what this impact will be as the full extent of the damage is still being assessed” said Whitehead.

While values have declined according to the QV index, the average sales price increased slightly from $407,191 to $409,700. This increase in average price is due to relatively fewer sales of lower value properties over recent months. The QV index is a more reliable measure of value change as it is not based on average sales prices and is not affected by which parts of the market are more or less active.

All the main centres are showing a similar pattern over the last year with values increasing through until March then easing since. Apart from Hamilton and Tauranga, values in the main centres are still above the same time last year, although the gap is rapidly closing.

Values in the Auckland Region have been flat over recent months, but as values were increasing rapidly this time last year, the year-on-year gap has closed further to 5.9 percent from the 6.9 percent reported last month. Values in the Wellington region have dropped in recent months and are now only 2.0 percent above last year, down from the 3.2 percent reported last month. Values in Christchurch values are 3.2 percent above last year, and in Dunedin 2.7 percent

Values in Hamilton (-1.5 percent) and Tauranga (-0.9 percent) are now both below the same time last year. Unlike the other main centres, these two cities didn’t show a significant increase in values during 2009, instead staying relatively flat. Declining values in recent months have therefore pushed values lower than they were the same time last year.

Values in most of the provincial centres remain above the same time last year, although the gap continues to close.

Napier (3.2 percent), New Plymouth (3.3), Wanganui (4.2%), Nelson (2.6) and Invercargill (3.0) all remain above last year.

Rotorua (1.0 percent), Gisborne (0.3 percent), Hastings (1.3 percent) and Palmerston North (1.6 percent) now have values similar to last year.

Declining values in recent months mean that values in Whangarei are now 2.8 percent below the same time last year, and Queenstown Lakes values are 1.5 percent below the same time last year.

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