Spring influx of listings may stabilise house prices, QV says

Property values are "rapidly returning" to their 2008 levels, as prices rose again in the three months to August from the three months to July, Quotable Value (QV) said. Property values in the August period were 2.8% below values in the corresponding period last year, compared to a 5% gap in July 2009, QV said. QV's average house sale price also improved 0.7% to NZ$385,426 in the three months to August from the three months to July. QV reiterated the statement it made in July that despite the recent rise in values, this was unlikely to signal another boom in house prices, with the current imbalance between buyers and sellers likely to be corrected as more properties come onto the market in spring.

"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," QV Valuation Manager Glenda Whitehead said. "(T)he 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," Whitehead said. "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," she said. "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." "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." "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." Here are QV's regional summaries:

Auckland Property values in the Auckland region declined by 1.5% over the past year (calculated over the three months ending August 2009 in comparison to the same period last year), an improvement on the 3.5% annual decline reported in July. The average sale price for the region increased slightly from $500,315 to $502,022. Values in the Auckland region are down 7.9% since the market peak. Glenda Whitehead of QV Valuations said; "There are mixed messages from the Auckland region market place, with some uncharacteristic activities for this time of year. August is still firmly a winter month, but buyers in some areas seem to have taken to the streets in droves, while the potential sellers are still preparing their properties in anticipation waiting for the real spring. This appears to be causing a supply and demand imbalance in the middle and mid-upper price brackets for some suburbs including Grey Lynn, Mt Eden, Epsom, Remuera, Pakuranga, and older parts of Howick, Te Atatu North and South, and the more desirable parts of Henderson and Titirangi. The imbalance is counter to the same time last year when we had listings galore, but no buyers. Now we have shortages of listings and ample buyers. There appears to be a hint of hysteria as evidenced by multiple offers, properties selling above asking prices on occasion and pent-up activity". "Undoubtedly the economic indicators and confidence levels have improved in recent months, and it is felt that due to this many potential buyers who have procrastinated over the past year to eighteen months have now decided to act, hoping to take advantage of what is seen as the bottom of the market. This is resulting in an upward shift in values in some areas, perhaps driven by those who don't want to miss out on potential gains through this perceived recovery" Whitehead said. "We are receiving reports that agents have many listings pending, and with the start of spring we may be presented with a more balanced market. An indication of confidence levels is that people are now willing to buy before they sell their existing homes, as they are confident they will be able to sell the existing home relatively quickly when required. Again, this situation is counter to behaviour a year ago" Whitehead said. "The lower end of the market within the wider Auckland region appears to be more stable at present. Investors are active, but only where the figures stack up based on cash flow, thus first home buyers still have the run of this market. Rentals in the region appear relatively stable too, suggesting that there is not a shortage of housing at present. The grapevine indicates that developers and builders are poised with hammers at the ready, willing to meet any housing shortfall, but that suitable profit margins are yet to show" Whitehead said. Hamilton Property values in Hamilton increased by 0.1% over the past year (calculated over the three months ending August 2009 in comparison to the same period last year), a significant improvement on the 2.9% annual decline reported in July. The average sale price for the city decreased from $344,081 to $339,298. Values in Hamilton are down 9.0% since the market peak. Mr. Richard Allen of QV Valuations said; "Year-on-year property values for Hamilton City recovered for the sixth month in succession and moved into positive territory for the first time since May 2008. All four areas in the city experienced healthy increases and it is further evidence that the City's residential market has stabilised for the time being. Although prices have at least flattened out from the erosive start to the year, the average sales price continues to fluctuate and does not give a great indication of real value shifts". "Whether or not this recovery continues remains to be seen, but I am still of the opinion that a potential lack of demand caused by poor regional economic factors and the reduced dairy payout should not be ignored in the medium term. There is also the potential that an increase of listings coming into spring could see less competition amongst buyers, thus easing recent value growth" Allen said. Tauranga Property values in Tauranga declined by 4.1% over the past year (calculated over the three months ending August 2009 in comparison to the same period last year), an improvement on the 6.6% annual decline reported in July. The average sale price for the region decreased from to $415,156 to $412,320. Values in Tauranga are down 10.6% since the market peak. Mr. Shayne Donovan-Grammer of QV Valuations said; "Residential property values in Tauranga have been relatively stable over the past five months. The bulk of activity is still occurring in the under $350,000 bracket which is having the affect of subduing the average sale price. The environment of low interest rates, sharp pricing and realistic vendors is making housing relatively affordable and is driving activity". "Some price brackets are desperately short of supply which has created the lift in values we have witnessed over recent months. For example, some properties previously selling in and around the $280,000 range are now selling for $300,000 or slightly above" said Donovan-Grammer. Wellington Property values in the Wellington region declined by 1.4% over the past year (calculated over the three months ending August 2009 in comparison to the same period last year), a substantial improvement on the 4.0% annual decline reported in July. The average sale price for the region increased slightly from $429,571 to $431,614. Values in Wellington are down 7.3% since the market peak. Pieter Geill of QV Valuations said; "The wider Wellington residential property market has experienced value growth for the fourth consecutive month. There are good attendances at open homes, good results at tenders, multiple offer situations and shortened sale periods. It could be seen as a good time to trade-up in Wellington at present". "The continuing shortage of listings has sparked renewed interest in property and this has resulted in the firming of values. Ultimately, people seem to be slow to list as they are reluctant to realise any lost value on their property due to the decline since peak. Winter is also a traditionally quiet period for sales and a portion of would-be sellers no longer have to sell as interest rates remain very low" said Geill. "In saying this however, I have started to notice a few more for-sale signs around very recently. We are about to hit spring and I would expect to see the number of listings increase as they usually do at this time of year. Our recent good weather and the well documented national shortage of listings could bring more houses to the market. It will be interesting to see if the seasonal increase in listings eventuates and what subsequent effect on values it brings" said Geill. "It is very hard to say if values will continue their upward trend in Wellington. An influx of listings coming into spring could very well see the market rebalance away from a seller's advantage. We also have a potential public-sector restructuring looming in Wellington which could shake things up a bit. So it's anyone's call" said Geill. Christchurch Property values in Christchurch declined by 1.9% over the past year (calculated over the three months ending August 2009 in comparison to the same period last year), a substantial improvement on the 5.5% annual decline reported in July. The average sale price for the city increased slightly from to $342,993 to $344,401. Values in Christchurch are down 7.6% since the market peak. Melanie Swallow of QV Valuations said; "the figures are showing a fifth consecutive month of recovery in Christchurch's residential property market, indicating a period of consolidation heading toward the summer months. These numbers still need to be treated with caution however." "Suburban Christchurch has held well, with all suburbs showing an improvement year-on-year. The market is showing clear segmentation with the level of activity strongest in the under $350,000 market, closely followed by the $350,000 to $500,000 price range. Local agents report a shortage of listings which is putting pressure on properties currently on the market and consequently we are a seeing healthy sale prices. The auction process also appears to be providing strong results. However, I am fairly confident that this represents a small bubble in the market and is nothing more than a volume-related issue for the short term" said Swallow. "We expect to see things soften slightly as the spring and summer months bring more listings to the market. Overall there has been an improvement in market sentiment, although buyer behaviour is still cautionary with job security and the ability to service debt being key factors for some folks at present. Looking forward we anticipate a more traditional spring and summer market" said Swallow. Dunedin Property values in Dunedin increased by 0.4% over the past year (calculated over the three months ending August 2009 in comparison to the same period last year), a substantial improvement on the 1.4% annual decline reported in July. The average sale price in Dunedin decreased from $258,813 to $254,619. Values in Dunedin are down 8.0% since the market peak. Mr. David Paterson of QV Valuations said; "Dunedin has moved to positive annual value growth for the first time since March 2008. We saw values bottom out in February this year when the annual decline was 9.4%. Since February, we have seen a steady improvement over six consecutive months". "Discussions with local agents suggest there is still a shortage of listings. There appears to be plenty of buyers which would indicate we have more of a sellers market and this may well be one of the reasons why we have seen an upward trend in values. It will be interesting to see whether spring brings an increase in listings, and if this will impact on values as supply and demand equilibrium becomes more balanced" Paterson said. "Our figures also show there is very little happening in the higher price brackets. 75% of the sales recorded in the three month period were $300,000 or below and 90% of sales were $400,000 and below. There were only two sales recorded over $800,000 in the Dunedin area" Paterson said.