Urgency among home buyers "all but gone" despite listings surge, QV says

Urgency among house buyers has "all but gone" in the past few months as buyers appear to remain cautious about employment, pending tax changes and bank funding, government valuation agency Quotable Value (QV) said.

Despite a seasonal surge of house listings in February and March, sales activity remained "relatively subdued", QV spokeswoman Glenda Whitehead said.

QV's house value index for March indicated nationwide values were 3.9% below the market peak in late 2007, the same as in February. Values were up 6.1% in March from the year before, compared to a 5.5% increase in February.

"Buyers appear to be holding back as concerns linger over job security, bank funding is perceived to be difficult to secure, and any tax changes remain unknown,” Whitehead said.

"The property market is now quite different to what we saw in the second half of 2009," she said."Not only have values remained relatively flat for the past few months, but the urgency amongst buyers has all but gone."

“The properties that are selling well are those that are well presented and appropriately priced. Buyers are generally being thorough in their research, and offers are often full of conditions.

“The range of factors affecting the property market remain finely balanced. How these factors change over the coming months will determine which way the property market goes. However we expect values to remain relatively stable rather than decline significantly.”

The national average house sale price fell to NZ$407,133 in March from NZ$416,074 in February, QV said. The average sale price was up from NZ$378,399 in March 2009.

However, "while roughly indicative of value, the average sales price is a less reliable measure of change than the QV index as averages can be biased depending on which part of the market is active", QV said.

QV's regional reports are below:

Auckland

Property values in the Auckland region increased by 9.9% over the past year (calculated over the three months ending March 2010 in comparison to the same period last year), an improvement on the 8.7% annual growth reported in February. The average sale price for the region decreased from $548,948 to $546,062. Glenda Whitehead of QV Valuations said; “While the year-on-year statistics continue to look very positive for the Auckland region, a closer look at recent months indicates values in many areas have hit a plateau. Discussion with our valuers supports this flat-lining theory, but scratching deeper into the local markets reveals that the various suburbs and price brackets are acting differently”. “On the North Shore, our valuers note that there appears to be more properties for sale at the moment. This is in contrast to what was happening back in late 2009 or beginning of 2010. The feeling is that in the lower price ranges, it is more of buyers market, while more balance is apparent in the mid ranges. In lower price brackets it is likely that investors exiting the market are fuelling the number of properties available” Ms. Whitehead said. “Auckland City values have stabilised at late 2009 levels. While many listings hit the market in February, we have heard comment from agents that once the media reported ‘a flooding of listings’, supply began to dry up. The market pendulum appears to have swung away from the sellers’ market of last year, and with this buyers lack urgency and are behaving cautiously. Premium prices achieved due to low listing numbers last year are no longer apparent” Ms. Whitehead said. “West Auckland activity continues much as it has done for the past couple of months with values relatively flat. Market uncertainty is driving more enquiries to our valuers as potential sellers try to understand values prior to selling. Activity in the mid price bracket of this market is still fairly active. We note many people renovating, extending and upgrading their existing homes, with banks requiring registered valuations to determine values before and after work is completed. Most investors seem to be waiting until after the Budget announcement in May” Ms. Whitehead said. “South Auckland’s investor-type suburbs (Otara, Manurewa, Mangere, Papatoetoe) are showing relatively stable values, with fairly buoyant activity as many investors look to pick up bargains, especially from mortgagee sales. Sellers and buyers appear to have similar price expectations” Ms. Whitehead said. “In South Eastern suburbs of Farm Cove, Sunnyhills, Half Moon Bay, Bucklands Beach through to Old Howick, values seem to be more optimistic. This area tends to offer quality housing in the mid value ranges of $500,000 to $800,000 and above. Our valuers have noted some cases where premiums were paid for more appealing properties. However, feedback is mixed and some agents have noted plenty of available listings” Ms. Whitehead said. “We expect that April activity will be dull due to Easter and the school holidays following it, as the market always seems to be subdued during school holidays” Ms. Whitehead said.

Hamilton

Property values in Hamilton increased by 3.8% over the past year (calculated over the three months ending March 2010 in comparison to the same period last year), down on the 4.3% annual growth reported in February. The average sale price for the city increased from $361,394 to $365,915. Mr. Richard Allen of QV Valuations said; “Rather than indicating the start of a downward trend, our latest statistics continue to fluctuate within a very narrow band, indicating that the residential market in Hamilton has completely levelled off”. “The residential market in Hamilton seems to now strongly favour buyers. This is probably largely due to the increase in the number of properties currently for sale, although some wider economic forces may also be at play. For example, we expect interest rates to increase mid year and there is still a lot of uncertainty in the agricultural sector” Mr. Allen said. “Although the average sale price for the city increased in March, this is most likely the result of activity in the north east of the city and some of the upper price brackets, rather than an increase in values across the board” Mr. Allen said. “During March most parts of the city’s year-on-year values slowed from February. The Central City and North West Hamilton area came back from 4.9 % to 3.5%, the North East from 5.3 % to 4.7%, and the South West from 2.9% to 1.4%” Mr. Allen said. Tauranga Property values in Tauranga increased by 0.1% over the past year (calculated over the three months ending March 2010 in comparison to the same period last year), down on the 1.0% annual growth reported in February. The average sale price for the region decreased from $422,746 to $413,173. Mr. Shayne Donovan-Grammer of QV Valuations said; “Tauranga’s housing market is continuing to slow, and we expect that this will persist for the time being. First home buyers are still the most active; they’re looking to secure a home before interest rates increase later this year. Banks are also currently offering over 80% lending, which makes a big difference to those trying to save deposits. As for current homeowners, is seems the average household is astutely aware of current economic and market conditions, and appear very cautious about incurring significant debt to move into a more expensive home”. “Investors are very inactive. In Tauranga most investors buy for capital gain, not for high returns. With no prospect of significant capital gain in the foreseeable future, there is not much incentive to invest. Also, a lot of investors have seen their purchases of the last two or three years lose value and have consequently become more conservative and cautious” Mr. Donovan-Grammer said.

Wellington

Property values in the Wellington region increased by 6.6% over the past year (calculated over the three months ending March 2010 in comparison to the same period last year), down slightly on the 6.7% annual growth reported in February. The average sale price for the region decreased from $468,698 to $458,260. Mr. Kerry Buckeridge of QV Valuations said; “There is certainly much more on the market, but that isn’t necessarily transpiring into more sales. Wellington’s residential property market is more active than a couple of months ago, but sales numbers do not appear to be keeping up with the increased number of listings, which is in stark comparison to late last year”. “Our year-on-year stats are still showing significant value growth, but this needs to be kept in context of what is happening today. A year ago we were pretty much at the bottom of the market, and there has been growth since then. However, during the course of my daily valuation work, I get the feeling that values are starting to flatten off. It feels like things are just starting to turn. Buyers don’t seem to be all that driven at present and we are hearing that agents are working hard to get people to put pen to paper. There just doesn’t seem to be much driving buying activity, or values for that matter” Mr. Buckeridge said. “Sellers seem to be doing everything in their power to entice offers. A fair few sellers are approaching us for registered valuations in order to affirm their selling price, or to guide their expectations. In fact, there seems to be a bit of uncertainty out there in general. Buyers are also seeking professional advice before committing to major property decisions, which seem to be coming under more scrutiny than usual” Mr. Buckeridge said.

Christchurch

Property values in Christchurch increased by 6.9% over the past year (calculated over the three months ending March 2010 in comparison to the same period last year), steady on the 6.9% annual growth reported in February. The average sale price for the city decreased from $380,925 to $374,117. Melanie Swallow of QV Valuations said; “Our outlook and statistics for March strongly point to a period of stabilisation. In fact, the Hill suburbs were the only area to show a slight lift in year-on-year values from last month, with the Eastern, Central and North and Southwest suburbs all showing a slight decrease. If all facets of the market remain the same, we may see values easing over the traditionally slower winter months.” “Currently there are more houses for sale than before the Christmas period. More listings seem to have ironed out the small short-fall in supply that was driving buyer competition, particularly in the entry level part of the market. This makes it important for vendors to put their best foot forward if taking a property to market” Mrs. Swallow said. “Agents report a reduction in buyer enquiry, and we are aware of a number of properties falling short of their reserve prices at auctions, particularly in the over $500K price range. Buyers should continue to take their time and exercise caution in their purchasing decisions” Mrs. Swallow said.

Dunedin

Property values in Dunedin increased by 7.3% over the past year (calculated over the three months ending March 2010 in comparison to the same period last year), up on the 6.2% annual growth reported in February. The average sale price in Dunedin decreased from $285,787 to $282,897. Mr. Tim Gibson of QV Valuations said; “Dunedin’s residential property market is now a year on from when value levels were at their lowest in March 2009. The city has seen a good recovery since then, with property values increasing 7.3% on average. The suburbs of Southern Dunedin have experienced the highest growth over this time of 9.6%. This can be compared Coastal Dunedin which has shown the smallest annual growth of 4.1%”. “On the surface this yearly growth is considerable, but early indicators suggest that values have begun to level-off substantially. The current market is experiencing a lower-than-expected volume of sales and an influx of residential listings. Some of these listings are a result of investors off-loading some of their portfolio prior to the May budget announcements, due to uncertainties with tax changes” Mr. Gibson said. “There is still relativity good demand for well located, tidy properties, with some evidence of quick sales. Properties which lack appeal due to deferred maintenance or location factors are lingering on the market much longer than in late 2009. There also seems to be a lack of buyer urgency at present, with a wait-and-see attitude evolving. Things could well remain relatively flat until the May budget is announced” Mr. Gibson said.