House prices flat as market stalls before budget, QV reports

Government-owned valuer Quoteable Value (QV) reported that house values were basically stable in April as the market continued to stall ahead of the budget on May 20. QV reported values across New Zealand were 6.1% higher in the three months to April from the same three months a year earlier, but had stagnated from March and had been basically flat since November. Values remain 3.9% below the peak reached in late 2007, it said. "The property market remains relatively subdued as both buyers and sellers carefully consider their positions. There is little urgency, and many people are waiting to see the exact nature of the changes in the May budget before deciding their next move," Glenda Whitehead of QV Valuations said. Whitehead said sales volumes in April were low, which was not unexpected with Easter and the school holidays consuming the greater part of it. "We are also seeing fewer properties being put on the market, which is also a normal trend for this time of year," she said. “It remains a very mixed market. Houses in some areas and price bands are showing good demand and value growth, while other parts of the market remain subdued with falling values. This varies from place to place depending on local social and economic factors,” she said. “Market activity over the coming months will in part be dependent on how people react to changes in the budget. If confidence returns then we may see an increase in activity during the winter months. However there is also the likelihood of interest rate rises in the middle of the year which will keep pressure on borrowers.” See the full Quoteable Value release with regional reports below:

Property values across New Zealand are 6.1 percent above the same time last year according to the QV residential property indices for April. The annual change in values is the same as reported last month and reflects stable values in both recent months and this time last year. Nationally, values remain 3.9 percent below the market peak of late 2007. Values increased steadily from May to November last year. As values are currently relatively stable the annual change will reduce in the coming months as the gap between last year’s values and this year’s closes. The national average sales price for the three months to April decreased further to $405,235 from $407,133 in March. 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. Glenda Whitehead of QV Valuations said “the property market remains relatively subdued as both buyers and sellers carefully consider their positions. There is little urgency, and many people are waiting to see the exact nature of the changes in the May budget before deciding their next move”. Whitehead said “sales activity in April was low, not unexpected with Easter and the school holidays consuming the greater part of it. We are also seeing fewer properties being put on the market, which is also a normal trend for this time of year”. “It remains a very mixed market. Houses in some areas and price bands are showing good demand and value growth, while other parts of the market remain subdued with falling values. This varies from place to place depending on local social and economic factors” said Whitehead. “Market activity over the coming months will in part be dependent on how people react to changes in the budget. If confidence returns then we may see an increase in activity during the winter months. However there is also the likelihood of interest rate rises in the middle of the year which will keep pressure on borrowers” said Whitehead. Values across the Auckland area are 9.5 percent above last year, back slightly from the 9.9 percent reported last month. Hamilton values are 2.7 percent above last year and Tauranga 0.6 percent. In the Wellington area values are 7.1 percent above last year, slightly up from the 6.6 percent reported last month. Christchurch has remained stable at 6.9 percent above last year, and Dunedin has increased slightly to 7.5 percent. There is more variability in provincial centre values compared to last year. Napier (6.4 percent), New Plymouth (7.2 percent), Palmerston North (6.9 percent) and Nelson (6.7 percent) have grown the most over the pat year, although most of that growth was during 2009 rather than in recent months. Gisborne (2.5 percent), Hastings (3.6 percent) and Invercargill (5.0 percent) have shown moderate growth over the past year. Values in Wanganui are only 0.4 percent above last year, values in Whangarei are equal, whereas in Rotorua (-1.2 percent) and Queenstown Lakes (-0.3 percent) values are below this time last year. Auckland Property values in the Auckland region increased by 9.5% over the past year (calculated over the three months ending April 2010 in comparison to the same period last year), down from the 9.9% annual growth reported in March. The average sale price for the region decreased from $546,062 to $532,538. Glenda Whitehead of QV Valuations said; “Usually by May we would have a strong indication of the overall flavour and direction of the residential market, but this year the messages we are receiving are a mix of positives, negatives and neutrals. The end result is a relatively flat market without a discernable label at present. 2009 dealt us a much more buoyant market when we expected a flat one, so perhaps we are now having a flatter, more sluggish year in 2010”. “The general consensus from our valuers working in and around the Auckland region is that the market remains steady, and that it continues to look for signals from the wider economy” Ms. Whitehead said. “In the west, there is still a reasonable amount of activity in the $370,000 to $550,000 value range. Home and income properties remain popular with investors, due to gaining two income streams off the one site. Buyers continue to thoroughly research the market, looking at everything available before making offers. Indications are that investors continue to wait for the budget announcements on the changes to property tax laws” Ms. Whitehead said. “Auckland city activity continues to show mixed signals. There appears to be some cherry-picking by buyers of the listings available, while other seemingly quality properties linger. With relatively low volumes of sales and the diverse spread of property types sold to date, there is no cohesive picture of where the market is leading. We continue to see localized pockets of activity, sometimes resulting in healthy sale prices, while other properties appear to stay on the market for longer than usual, or sell below expectation with no clear indications of why” Ms. Whitehead said. “Looking forward, we believe values will probably fluctuate within a narrow band, essentially indicating a fairly stable market. However, this balance could be tipped either way by budget announcements or interest rate movements as we move through the year. The residential market often interprets data or sees the future in ways we often can’t predict, altering values accordingly” Ms. Whitehead said. Hamilton Property values in Hamilton increased by 2.7% over the past year (calculated over the three months ending April 2010 in comparison to the same period last year), down on the 3.8% annual growth reported in March. The average sale price for the city decreased from $365,915 to $357,200. Mr. Richard Allen of QV Valuations said; “Although this is the second consecutive month where year on year growth has trended backwards, it would be a little premature to suggest that we are seeing the start of a downward trend. Residential property values in Hamilton City continue to fluctuate within a very narrow band, as they have done for the past six months or so”. “During April, most parts Hamilton, with the exception of Hamilton North East, experienced a slowing of year on year growth. This was most prevalent in South East Hamilton which decreased from 4.9% in the year to March, to 2.5% in the year to April” Mr. Allen said. “It appears that uncertainly around May’s budget announcements and the likelihood that interest rates will increase mid year is currently dampening buyer demand and stifling value growth in the Hamilton residential market” Mr. Allen said. Tauranga Property values in Tauranga increased by 0.5% over the past year (calculated over the three months ending April 2010 in comparison to the same period last year), up slightly on the 0.1% annual growth reported in March. The average sale price for the region decreased slightly from $413,173 $412,080. Mr. Shayne Donovan-Grammer of QV Valuations said; “The residential property market in Tauranga has continued to stall over the last month. The much anticipated budget announcements later this month should bring some clarity and direction to the property sector, particularly for investors. While many commentators over the past months have attributed a quiet market to the budget announcement, time will tell whether we see a lift in activity next month. With the announcement so close, it seems plausible that this has been a factor playing on buyers’ minds. Whilst most budget attention has focused on rules around investing, general household affordability through tax cuts is also a key issue which could act on the market”. “Lending difficulties have also contributed in slowing down property decisions, with banks being stricter on their criteria. First home buyers are still the most active sector and good property under $350,000 has a higher chance of selling. It is a buyer’s market, and while prices are fairly sharp, there haven’t been too many heavily discounted sales of late” Mr. Donovan-Grammer said. Wellington Property values in the Wellington region increased by 7.1% over the past year (calculated over the three months ending April 2010 in comparison to the same period last year), up on the 6.6% annual growth reported in March. The average sale price for the region increased slightly from $458,260 to $460,365. Mr. Pieter Geill of QV Valuations said; “We seem to be getting some interesting signals from the residential property market in and around Wellington. It appears as though the Hutt Valley is a little more buoyant than Wellington and Porirua, where values have basically flattened out in the past few months. In saying this however, the top end of the market is very active in and around Wellington”. “In our Wellington regional office, our registered valuers are busier than usual completing valuation work for home buyers and sellers. Buyers are definitely around and it looks as if the large number of listings which started accumulating earlier this year is starting to move. Anecdotally, it seems as if properties are selling faster than new listings coming to market, or perhaps even being withdrawn from sale and moved to the rental market. This phenomenon is at least ensuring values aren’t going backwards for the time being” Mr. Geill said. “Vendors are becoming more realistic in meeting the market. Consequently, we are busy with owners who are thinking of selling but want a market value on their property before entering into the selling process. This may be due to the uncertainty surrounding the real estate market at present, which is causing people to get advice before making any major commitments. Similarly, some agents are even suggesting their vendors get an independent market valuation to align their expectations with the market” Mr. Geill said. “Looking forward, it is very difficult to pick what values might do. We are entering the typically slower part of the year for real estate and the new Government budget is about to be announced. At the very least this will help some to make a decision, one way or another” Mr. Geill said. Christchurch Property values in Christchurch increased by 6.9% over the past year (calculated over the three months ending April 2010 in comparison to the same period last year), steady on the 6.9% annual growth reported in March. The average sale price for the city decreased from $374,117 to $367,688. Melanie Swallow of QV Valuations said; “Residential property values in Canterbury have remained static through April 2010 and consequently year on year growth has remained unchanged from March. The Hill suburbs showed a slight lift of 0.3%, with the Central and North suburbs lifting 1%, while the balance of Christchurch showed an easing of year on year growth from March. These small movements essentially cancel each other out when looking regionally”. “There is still more housing stock available for sale than prior to the Christmas period, although agents are reporting fewer new listings in April. Overall, the increase in listings since the Christmas period has ironed out the small short fall in supply that had been driving values late last year. Properties currently for sale need to be sharply priced to generate interest” Mrs. Swallow said. “We are hearing about a reduction in buyer enquiry and banks also report a decrease in lending activity. The mood overall is subdued with buyer behaviour cautionary, perhaps in anticipation of the May budget. There appears to be an element of wait-and-see before major property decisions are made, and given that market indicators suggest a plateau in values, we could even see values easing over the slower winter months” Mrs. Swallow said. Dunedin Property values in Dunedin increased by 7.5% over the past year (calculated over the three months ending April 2010 in comparison to the same period last year), up slightly on the 7.3% annual growth reported in March. The average sale price in Dunedin decreased from $282,897 to $275,142. Mr. Tim Gibson of QV Valuations said; “These latest statistics confirm that values in Dunedin’s residential property market have remained fairly static since December. This static growth is probably caused in part by market uncertainty prior to the government budget announcement later in May”. “Uncertainty appears not only to be influencing investors, as the volume of family house purchases appears to be down as well. This could have the effect of stock taking longer to sell due to less active buyers in the marketplace at present” Mr. Gibson said. “There is some evidence that the top end of Dunedin’s market is holding up, with nine sales occurring in the seven hundred thousand dollar plus bracket for the month of April. This included one residential sale of over two million dollars. This has been the highest volume of sales occurring in this bracket for some time” Mr. Gibson said. “Within Dunedin City, the Taieri area has been the most buoyant area, with annual growth of 10.2% to April, up from 7.3% to March. The other areas within Dunedin have experienced a decrease in their annual change, with Southern Dunedin easing the most since March” Mr. Gibson said.