Nationwide residential property values increased further in December according to the latest monthly property value index from QV.
Values are up 1.5% over the past three months, 5.7% up over the past year, and 2.0% above the previous market peak of late 2007.
The following is the media release from QV.
Jonno Ingerson, QV.co.nz Research Director said “Looking back over 2012 the increase in national values was predominantly driven by Auckland and to a lesser extent Christchurch. These were also the only two areas to have consistently increased while the rest of the country varied throughout the year.”
“The year began with the number of sales in January 29% higher than the previous year, the highest January since 2008. The trend continued throughout the year with most months 20% to 30% higher than 2011 and higher than any year since 2007”.
“However, to put that in context, after the 2007 peak sales volumes were particularly low, so although volumes are now up from 2008 they are still 30% to 40% lower than during that 2003 to 2007 period when the market was flourishing. Furthermore, the increase in sales volumes was largely in the main centres, especially Auckland, as sales numbers in the smaller centres remained subdued” said Jonno Ingerson.
“One of the defining features of 2012 was the low number of properties on the market. Many willing buyers found it hard to find suitable properties and this to some extent constrained sales volumes. As has been the case for the past several years, quality properties in desirable areas tended to sell quickly for good prices, while properties with perceived flaws either sat on the market or needed to be discounted” Jonno Ingerson said.
Main centre comparison
When comparing the main centres, it is clear that the national increase of 5.7% over the past year does not represent increasing value across most of the country, but rather increases in Auckland. North Shore, Waitakere and Manukau all increased by 8% to 9% and old Auckland City increased 11%.Across most of Auckland values are now well above the previous market peak of 2007, with old Auckland City 14.7% up. When adjusted for inflation this makes values in old Auckland City equal to the 2007 peak.
Values in Christchurch also increased slightly more than the national average, driven by the post earthquake demand for undamaged houses. The areas surrounding Christchurch were about equal to Auckland in their value growth.
The general trend for rest of the main centres was a flat start to the year, growth around mid-year then a faltering finish. As a result, most were little more than flat, with Dunedin increasing the most at 2.9% and Tauranga ending the year 0.3% down.
Provincial centres
Over the course of 2012 most of the provincial centres increased slightly in value, with all certainly well below the national figure of 5.7%. Palmerston North increased the most at 3.6%, followed by Queenstown Lakes at 2.9%. Whangarei dropped slightly in value while Gisborne slid for much of the year to end the year 5.3% down.
There were no consistent trends throughout the year, however, several of the provincial centres showed signs of value increase in the middle to latter part of the year. However, like the main centres this faltered in the last few months of the year.
Sales volumes also picked up in most of the provincial centres compared to 2011 but generally remained well below peak volumes seen in 2003 to 2006. The major exceptions were Queenstown Lakes and Nelson where sales volumes are very close to previous peak levels.
The outlook for 2013
The year has begun with supply still constrained due to a low number of new listings.
In Auckland in particular people are in a vicious cycle where they won’t put their properties on the market until they find a new house, but they can’t find a new house as there are few on the market. With supply low and strong competition for quality properties many would-be buyers are missing out so their houses are not yet on the market. This dynamic would need to change in order for the number of sales to pick up.
With Auckland likely to continue to get more internal and external migration than other parts of the country the demand for housing is not likely to ease in the short term. Values in Auckland are likely to keep rising, particularly in the middle value range. We have already seen values in many of the more expensive suburbs ($900k+ average value) begin to level off.
The Wellington area has suffered in the last few years from a lack of confidence in the housing market, at least in part relating to uncertainty for some around public service restructuring. It is unlikely that mood will change in Wellington in the short term so values are likely to stay relatively flat.
Values in Christchurch and the surrounding areas are likely to keep growing as demand continues to outstrip supply.
The rest of the country looks to remain variable in response to local economic conditions, but in most areas values will remain relatively flat.
The housing market does ebb and flow in response to consumer confidence. In the last few years we have seen a change in confidence in the New Year, either positive or negative, and this has flowed into the property market. Changes in consumer confidence are hard to predict but by the end of February we should have a clearer idea of where the market is heading in 2013.
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37 Comments
Oh I wonder if the writers of such articles and those who comment on the market going up and up in Auckland know how the rest of us peasants in New Zealand feel when we are desperately trying to sell our houses and having no luck. And its not as if we are asking absolutely ridiculous prices for them. We have accepted an offer on our house for 10 percent below QV as that is what the market is dictating in our district. Its a conditional offer - chain going on everybody has to sell their house before ours can happen and its not looking hopeful but its the only offer we have had in nine months. If it doesn't happen then maybe we have to give it away - i.e. give the house away or take it off the market.
Just don't get that there are so many millionaires in Auckland who can afford to pay for what look like in many cases absolute dumps.
Oh and before we start reading comments on this article about the fact that the market will always go up and up I can tell you I am old enough (65) to remember two collapses in the housing market since the 1970s one of which I lost heaps on. AND GUESS WHERE THAT HOUSE WAS - AUCKLAND, Remuera to be precise! 1990 was the year.
"AND GUESS WHERE THAT HOUSE WAS - AUCKLAND, Remuera to be precise! 1990 was the year" Like shares, if you hang on to it, it'll worth a mint now. My parents bought their bungalow in the late late 1980s in Parnell (wasn't that trendy back then). It'd be interesting to see how much its value these days, now that they are retiring in Aust and will need to off load it soon.
Unfortunately there are what's called the 3D's (and its nothing to do with film) why people have to sell houses, Death, Divorce, and Debt. Mine was divorce so had to sell and cldn't hold on to the Remuera property. Its QV is now around $2m but its old and its eating money. Bought the house at the boom of the sharemarket when the whole world was going mad in the 1980s and everyone thought they were multi-millionaires and for a brief moment we were - all on paper and then (and I don't want anyone's sympathy didn't feel sorry for myself then and still don't) it all came crashing down - shares and property all at once. So younger ones out there beware. By the way I'm not in debt now just want a smaller property in my old age.
Thank you Iconaclast you are very kind. While making my blackcurrent jam I was remembering the so-called good old days and how literally overnight the sharemarket crashed. Scenario - we were in North America at a conference of one of NZ's leading (at the time) companies when the chairman of the board informed us that our shares in the company had doubled in value. Dom Perignon all around. We caught a plane back to New Zealand two days later and were in mid-air on Black Monday 19 October 1987 and as we landed we were informed the whole sharemarket had crashed. Not even an orange juice was offered. It was just a big laugh and I think the whole housing market is now a big laugh as well. You haven't lived until you have gone through something like that and drunk Dom Perignon eh?
And as for SK's remarks that we are taking a bath in accepting an offer of -10% lower than QV - we are still making a profit on what we built our house for in 2002 - just not being greedy that's all - still getting double its value from 2002 which is nice if it happens.
I'm an old woman and I don't even live in "Remmers" dahlink. Lived there once. I grew up poor in a poor neighbourhood with respitory (note correct spelling) diseases, tuberculosis to be precise all around us. I was just lucky I didn't get it. You can take the girl out of Naenae but you can never take Naenae out of the girl, so until you have lived your life and experienced a lot keep out of the argument.
http://en.wikipedia.org/wiki/Respiratory_system
Perhaps you do deserve sympathy!
OMG Von, if I were to sell my house I would add at least another 30% over the CV. I feel sorry for you.
Nah - don't feel sorry for me doublegz thats just the way things are where I live and besides which we just want a few more coins in the purse to see out our days before the resthome comes begging! In the meantime I have to say without being so in love with my own house that if the offer is successful the buyer is getting a lovely home in a fantastic location in rural New Zealand for what they may consider is a steal. And they are locals so won't be moving far. Thanks for your concern though.
My thoughts here on this website (and ramblings probably) are just that I am trying to understand what is going on in the market especially in Auckland as it just seems so unreal. Feel so sorry for younger generation and first home buyers up there.
Try this
Exactly 13 months ago I looked at this property. It was one of two identical sized sections available, approx 800m distance from one another, except one of them (the one shown below) had an old shack on it which was originally a garage (boat shed) that had been converted to a bach, About 30-40 sqm. The price for the vacant section was (from memory) about $400k, while the one with the shack on it, they wanted nearly $600k. They were valuing that shack at $200k. The Barfoot's agent explained (with dead-pan-face) the reason for the difference was because it was rented out at $200 pw, which gave it added capital value.
Have a look now. Asking price today $1,000,000
http://www.trademe.co.nz/property/residential/sections-for-sale/auction-493542085.htm
Still on the market. Hasn't sold.
I recently returned from my OE in London, then Sydney; I owned a flat in London and looked at buying one in Sydney but didn't. In my experience Auckland property is very cheap across the board, especially apartments. You can't get anything in Sydney or Melbourne within a kilometer of the beach for less than a million. In London there is no such thing as a detached house on a quarter acre for any price. Here I bought (in 2009) a 4 bed house on 1100sqm in Mellons Bay, Auckland for $565k. Looking at buying apartments now and will be getting 2 bed, freehold, no issues apartment for around $350k. There's a good reason there are so many overseas buyers in the Auckland market, they could choose anywhere in the world but they're here because our market is so far behind international counterparts.
What needs to change in Auckland is first home buyers expectations.
I agree, I spent a week in Milan (same population as Auckland but bugger all jobs). the average professional salary in Milan is around 25K Euro, typical 2br apartments way out of the city would set you back about 300K+, inner city 600-700K. And that just apartment prices. The locals told me that it used to be much more expensive. Auckland is cheap by comparision..
You have just given 2x examples of the definition of "undesirable":
1. Mellons Bay - nowhere near Queen St - LOL
2. Apartment - ROFL
The international appeal, economy and experience in London is at another level than Auckland. To every compare the appartment market here with an international city is perverse, its relatively cheap for a reason.
I have held investment portfolios in all three cities...Auckland has international appeal currently however not in the appartment market and it appeals largely to those that could only dream to buy in a true international city. You will not even begin to buy anything of quality in Chelsea for 2.5 million NDZ.
The central bank governors and heads of supervision that oversee the Basel Committee on Banking Supervision agreed to a very substantial softening of prospective global liquidity standards. This development is bullish for the international banks and for the global economy and markets.
The revised standards include a very welcome four-year delay in the date when they are to be fully enforced, moving it to 2019.
The most important, and also somewhat controversial, revisions concern the definition of "high-quality liquid assets" that banks will be required to hold as a buffer against a future crisis. The definition had been very tightly drawn, to include only government bonds, cash, and central bank reserves.
Now it is much broader, including also corporate bonds rated A+ to as low as BBB-, AA-rated residential mortgage-backed securities, and even certain equities.
Softening the standards should ease the current problem, particularly apparent in Europe, of banks seeking to amass liquidity to meet the anticipated future regulations to the detriment of lending to businesses and consumers.
HGW
"I recently returned from my OE in London, then Sydney; I owned a flat in London and looked at buying one in Sydney but didn't. In my experience Auckland property is very cheap across the board, especially apartments. You can't get anything in Sydney or Melbourne within a kilometer of the beach for less than a million. In London there is no such thing as a detached house on a quarter acre for any price...."
Happy123's comments reveal the total contradiction in perception regarding Auckland's property market. Most of the comments by crash and burn doomsayers do not take into account the reality of the world we live in. NZ and Auckland top all the lists for quality of life, safety, corruption, ease of business etc...the list goes on. NZ is perceived as a place of innovation and potential (even if we don't) - And there is still the physical space to move and grow and not have the feeling you are part of a seething mass of people sharing a rat race.
So when you compare those qualities to that which is on offer in other large cities overseas - Auckland is not overpriced!! Because, (to quote my favourite explanation for eveything!) everything is relative. Auckland and NZ's desirability as a liveable safe haven will bring people here willing to pay those "relatively low property prices" for a long time to come. Everyone with money and/or the desire to find a safe, quiet niche for themselves are catching on to the simple fact that New Zealand is the place to be.... And the quicker they get a toe in the better! It doesn't sit well with us of course because we can't afford to buy property in a market driven by overseas buyers and well healed NZ'ers.
But this is the reality of today's property market - like it or not.The property upswing is not over (and the rest of NZ will follow, in time, as investors look elsewhere). And yes, of course there will be a price correction at some point, but by the time there is a market correction it will again be marginal and coming off record highs, yet again!
Interesting discussion.We shifted back to NZ from Aussie for a number of reasons but bushfires and water were among them. The climate does seem to be changing and it may not be a kind change for the Aussies in particular.
I do think NZ has more going for it than almost anywhere and if we would just stop moaning and get on with things it would have even more.
Having said that I do wonder why the Auckland market is so much more active than anywhere else in the country. In the end the pressures of population and house prices will make people reluctant to live there so it may all even out.
Because of the many factors that support its status as the industrial/economic drive-train of NZ Inc.
Traditionally Auckland has always been the immigration portal to New Zealand, and thus it has always had a dynamic growing economy that has been fuelled and supported by a flourishing workforce in an almost self-perpetuating way. It's almost energetic - more of one leads to more of the other - the growth is concentric in Auckland and as long as people keep heading there as their first port of call, it probably will remain so.
It's not haphazard this - due to its benign semi-tropical climate and multi-harboured coastal location Auckland has always been appealing enough to hold those who arrive there, as jobs and business opportunities are far greater.
Add to this a modern economic twist, whereby Auckland is seen by the world's wealthy as a viable living alternative (based on the list topping indicators it has achieved), in close proximity to the upper North Islands resplendant and underpopulated beaches and you have the full package.
Auckland is pretty much NZ's Sydney (for the good and the bad of it!) and there's still a long way to grow yet, believe me.
Auckland is going to keep growing, prices are NOT going to go down - so if you don't like the place you might as well get out now and give your spot to somebody else in the queue, as you can see they are all lining up!
This is a cool interactive tool from the Economist that compares NZ house prices withother countries using a variety of measures: http://www.economist.com/blogs/dailychart/2011/11/global-house-prices
I have just returned to the
Netherlands from a Christmas visit home to NZ. It is difficult to argue that
Auckland is not anything but a beautiful city, the Waitamata harbour is glorious, the food culture is really hard to beat. But I cannot get bullish about the housing market in
Auckland, fundamentally everything points to a bubble. For one the house prices across both NZ and Aussie have not had much of a correction considering the global situation, the value of Aussie banks is totally out of whack with the economy. The CBA is valued greater than all the banks of
Germany.
Germany a country of 80 million, a positive balance of trade, a manageable debt level. Aus and NZ, negative balance of trade, private debt of mammoth proportion, NZ has unsustainable government debt growth. Aussies cannot live within their means even in the midst of the greatest boom time.
The global economic picture is a disaster, only looks as it does due to extraordinary monetary policy. Zero interest and QE, along side unsustainable government deficits are hiding the underlying structural problems in many western countries.
For me the risk of buying in this current
Auckland market is high. While house prices in central Auckland may compare favourably to many global cities,
Auckland is beautiful, but not a global city with hundreds of millions of people potentially able to drop in and out within a couple of hours of travel.
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