House prices stabilising, says QV

House prices stabilised in April and the property market may have bottomed out because lower interest rates and lower house prices have dragged first home buyers and rental investors back into the market, Quoteable Value reported. Property prices were down 9.2% Nationally from a year ago in April, while they had been down 9.3% the previous month. Property prices are now down 9.6% from their peak in January 2008, QV said. "The increased market activity seen in February and March has flowed through into April, which has led to more sales than we would normally expect at this time of the year," QV spokesman Blue Hancock said. "There are clearly different dynamics across the property market, and people are carefully considering their options. Lower interest rates and cheaper properties are leading first home buyers and investors back into the market," Hancock said. "Homeowners are also weighing up their situation, with some choosing to stay put and renovate, while others see great opportunities to upgrade, as the upper end of the market becomes more affordable. As a result of this increased activity we are starting to see a shortage of listings, particularly at the lower value end of the market," he said. The average sale price fell from from NZ$378,399 in March to NZ$372,981 in April, reflecting more sales at the lower end of the market, QV said.

QV uses a different methodology for calculating property prices than REINZ, which has yet to report its figures for April. QV compares the prices of similar houses in similar houses in the three months to the latest month with the same three months a year ago. REINZ simply takes a median of all the house sales in any one month. The REINZ method is more immediate because the last month's results aren't diluted by the previous two months, but it can be skewed by a lot of sales in one part of the market. "Prices tend to be holding for mid value, well presented properties in good areas, whereas poorly presented properties and properties at the top end of the market are taking longer to sell and are struggling to hold their value," Hancock said. QV said values in the main centres have begun to flatten over recent months. As a result the annual change in property values across the Auckland area has improved from -10.1% last month to -9.0%. The Wellington area has also improved to -8.5%, Hamilton to -8.8%, Christchurch to -9.6% and Dunedin to -8.0%. Tauranga is the only main centre to worsen, with the annual decline slipping to -9.9%. Prices being paid for property in most provincial centres have been flat for the past few months leading to improvements in the year on year change in many areas. The year on year change has improved to -9.8% in Rotorua, -5.4% in New Plymouth, and -10.2% in Palmerston North. Gisborne has remained steady at -14.8%, while Whangarei at -13.1% and Queenstown Lakes at -9.3% have both fallen further. "Recent stabilisation of property values in many areas suggests that we may be near the bottom of the market. We expect values to remain relatively flat over the winter months, although the threat of rising unemployment may affect an increasing number of homeowners and potential home buyers," Hancock said. "There will continue to be good opportunities for buyers who can afford to be in the market."