House prices rising as new listings fail to appear, QV says

House prices were up 0.2% in the three months to October from the same period a year ago, but market activity remains below normal spring levels as listings fail to materialise, Quoteable Value has reported in its monthly report on house prices. Prices remain 7.5% below the peak in January 2008, but are now up 4.1% from their trough in April 2009. "Market activity remains below normal spring levels. The number of sales has remained relatively static over the past few months, and there is little evidence of an increase in new listings in most areas" said QV Valuation Manager Glenda Whitehead. "The continued shortage of properties, especially in the main urban areas, is leading to a continued imbalance in the market with more buyers than available properties. As a result our Valuers are seeing many properties sell for well above their expected values. These demand-based price increases are likely to continue until the balance in the market changes." The full QV report is below.

Property values are now above the same time last year according to the QV residential property indices for October released today. Nationally, values are 0.2 percent above the same time last year, up from the -1.1 percent reported last month. Nationwide values are now 3.4 percent up from their low in April, but remain 6.6 percent below the market peak of late 2007. A further market measure, distinct from the index, is the average sale price which across New Zealand also increased slightly to $389,198 in October from $387,567 in September. "Market activity remains below normal spring levels. The number of sales has remained relatively static over the past few months, and there is little evidence of an increase in new listings in most areas" said QV Valuation Manager Glenda Whitehead. "The continued shortage of properties, especially in the main urban areas, is leading to a continued imbalance in the market with more buyers than available properties. As a result our Valuers are seeing many properties sell for well above their expected values. These demand-based price increases are likely to continue until the balance in the market changes. This will happen either when more properties come onto the market, or when buyers consider prices to be beyond their affordability and as a result consider other parts of the market, or resolve to continue their current living arrangements. Building consents have risen in recent months but it will take some time yet for those properties to reach the market" said Whitehead. "The lack of strong spring activity could be due to several factors. Many owners will have locked in to lower long term interest rates at the beginning of the year and will be concerned about losing those rates if they sell. Having made the decision some months ago to stay put, they may now be extending or renovating and no longer be considering selling" said Whitehead. "While it is clearly a good time to sell, especially in the main centres, needing to buy again in a market which has a shortage of available properties for sale will also be putting some people off" said Whitehead. Values in the main centres have recovered considerably since earlier this year. As a result, most of the main centres now have values above the same time last year. In the Auckland Area values are now 2.5 percent above last year, the Wellington Area is 1.6 percent up, Christchurch 1.3 percent up, and Dunedin 4.3 percent up. Hamilton is only 0.1 percent below last year, while Tauranga remains the only main centre to be below last year at -1.4 percent. Values in most of the provincial centres have not risen as much in recent months as the main centres. As a result most are still showing values below the same time last year. Whangarei is -3.3, Rotorua -0.9 percent, Gisborne -7.9 percent, Wanganui -3.2 percent, and Invercargill -0.8 percent. New Plymouth at 4.6 percent, Palmerston North at 2.4 and Nelson at 0.6 percent are above last year. Values in Queenstown Lakes have continued to slide further and are now -9.4 percent below last year. Property values in the Auckland region increased by 2.5% over the past year (calculated over the three months ending October 2009 in comparison to the same period last year), a substantial improvement on the 0.6% annual growth reported in September. The average sale price for the region decreased slightly from $507,617 to $506,642. Glenda Whitehead of QV Valuations said; "Within the Auckland region, conditions and trends seem to have changed very little over the last month. Agents continue to report a lack of listings in many suburbs and across the various price brackets. Demand remains strong from first home buyers and those trading-up. A significant number of properties continue to be sold via auction, which is producing results ranging from many being passed-in to those that are exceeding vendor expectations. For general listings we are aware of multi-offer situations". "Within Auckland City, demand in the price range of $600,000 to $900,000 in suburbs close to the CBD remains strong, with values well up on those achieved at the beginning of 2009. Listings in this price bracket are low, creating multi-offer situations and strong results at auction" Ms Whitehead said. "In Waitakere, our valuers report that more investors have come out of the woodwork, but their activity to date remains subdued. Building activity including renovations, new builds and infill housing is now noticeable. Some activity is also evident in the higher price bracket in this City" Ms Whitehead said. "Within Manukau, demand from first home buyers and owner-occupiers appears to have returned in the newer suburbs of Dannemora and Flat Bush, which has resulted in mild price appreciation recently. While investors are active in areas such as Papatoetoe and Manurewa, prices remain relatively stable" Ms Whitehead said. "On the North Shore we are now seeing an increased number of sales in excess of $2 million, particularly within the Milford/Takapuna area. However, to sell in this price bracket homes need to be substantially sized with an obvious coastal flavour. This portion of the market was stagnant in 2008, and although things are slowly moving now, prices are still not back to 2007 levels" Ms Whitehead said. "While there are obviously some buyers willing to push values up in order to secure property, we continue to see purchasers remaining cautious, setting their value limits and walking away where prices exceed their expectations" Ms Whitehead said. Hamilton Property values in Hamilton decreased by 0.1% over the past year (calculated over the three months ending October 2009 in comparison to the same period last year), a slight improvement on the 0.9% annual decline reported in September. The average sale price for the city decreased from $344,971 to $342,853. Mr. Richard Allen of QV Valuations said; "Our statistics this month show that the slight backward value fluctuation we saw in last month was a slight aberration. The residential market in the city has stabilised for the time being". "All four areas in the city experienced slight improvement, the largest being in the Central City/North West Hamilton area where property values increased from -0.2 % in September to 1.8% in October. The South East also improved from -1.2 % to -0.6%, although is not yet experiencing positive year-on-year growth. The South West improved from -1.4% to -0.9%, and Hamilton North East from -1.2% to -0.6%" Mr. Allen said. "Whether or not this recovery will continue remains to be seen. The market has already absorbed a number of potential set-backs which appeared likely because of poor regional economic factors. It now appears that a sustained period of stability will ensue" Mr. Allen said. Tauranga Property values in Tauranga declined by 1.4% over the past year (calculated over the three months ending October 2009 in comparison to the same period last year), a slight improvement on the 1.8% annual decline reported in September. The average sale price for the region decreased slightly from $402,880 to $400,367. Shayne Donovan-Grammer of QV Valuations said; "Talk of Tauranga's property market being a seller's market is a little bit misleading. Whether a buyer or seller holds the upper hand is largely dependant on the property's price bracket and location. We are seeing different parts of the market behaving quite differently". "The first two weeks of October kicked-off well as one would expect for this time of year, but the last couple of weeks have seen the property market hit a flat patch. Talk of a capital gains tax is not exactly the news investors want to hear, which could see activity levels dwindle somewhat" said Mr. Donovan-Grammer. Wellington Property values in the Wellington region increased by 1.6% over the past year (calculated over the three months ending October 2009 in comparison to the same period last year), an improvement on the 1.1% annual growth reported in September. The average sale price for the region increased from $436,633 to $438,584. Wellington City Council ratepayers have recently received their updated Rating Values from QV. Rating Value changes are over two years and are therefore not comparable to the year-on-year figures quoted above. Pieter Geill of QV Valuations said: "The shortage of listings in Wellington and the Hutt Valley continues. The traditional spring resurgence which we would normally see at this time of year is still holding off and is putting upward pressure on prices. Good homes are attracting competition amongst buyers, especially at tender which seems to be an effective sales method in this scenario". "Interestingly, the upward price pressure seems to be localised to main centres. In more provincial areas of the Wellington region there seems to be more listings and less competition amongst buyers. Supply and demand are more balanced in these areas which is alleviating any substantial price increases for the time being. This situation is especially prevalent in areas where batches and second homes are traditionally popular" Mr. Geill said. "There still appears to be mortgagee and distressed sales around, and I believe these will hover for the medium term. Although some borrowers are benefitting from the current floating rate, interest rates are rising again and unemployment is predicted to reach 7%" said Mr. Geill. Christchurch Property values in Christchurch increased by 1.3% over the past year (calculated over the three months ending October 2009 in comparison to the same period last year), an improvement on the 0.4% annual growth reported in September. The average sale price for the city increased from $348,922 to $352,962. Melanie Swallow of QV Valuations said; "Suburban Christchurch has held well with the southwest suburbs showing the greatest recovery, up 1.9 per cent year-on-year. This area is closely followed by the central and northern suburbs at 1.6 per cent. Whilst these results are encouraging, they must be treated with caution. There are also signs of a heavily segmented, two-tier market". "In the entry-level part of the market, many properties are being taken to auction and are achieving very strong results, in some cases above what we would consider market value. This is fantastic if you need to sell, but those who are purchasing need to exercise caution. Competition is strongest in this part of the market, attributable in part to a shortage of stock available for sale" said Mrs. Swallow. "House prices in provincial areas are showing a slower recovery, with more balance between the volume of homes for sale and active purchasers. This might be more indicative of market characteristics yet to be experienced for metropolitan Christchurch. We expect this current trend to continue through the summer months" said Mrs. Swallow. Dunedin Property values in Dunedin increased by 4.3% over the past year (calculated over the three months ending October 2009 in comparison to the same period last year), a substantial improvement on the 2.2% annual growth reported in September. The average sale price in Dunedin increased from $258,103 to $268,253. Mr. Tim Gibson of QV Valuations said; "Residential property values in Dunedin have continued their strong recovery since bottoming out early in 2009. Our statistics show that this is the third consecutive month of positive annual growth within the city, with property values approximately 5.5% above the low of early 2009. This growth has been fairly constant for all parts of Dunedin. Values are still 5.4% below the peak of the market in July 2007 however". "The market has again been driven by a lower number of properties entering the market, resulting in shorter selling times. This low level of listed property has resulted in a classic demand and supply situation where the high demand for properties has often resulted in multiply parties negotiating the price upwards" Mr. Gibson said. "National building consents have also shown an increase recently. This could indicate that more property owners are choosing to renovate their existing homes, instead of selling and upgrading. This could be one reason why less property is going to market at present" Mr. Gibson said.