Houses on the market balloons in Wellington during Feb. - update March 4th

In the latest monthly property report realestate.co.nz suggests that there has been a 142% increase in listings on the market during Feb. To quote....

"Most significant was Wellington which has for so long been running on a shortage of new listings – the regions saw a surge with over 2,000 listings, a level not seen over the last few years. Matching that level of new listings was Canterbury with a 34% year on year rise."

 

ANZ predicts cooling property market - 19th Feb

The direction for house prices is down in what is a cooling market, according to ANZ's 10 property gauges.

By Paul McBeth

The bank's economists say the market has been slowing down for three months and central bank loan approval data suggests this month may have wiped more momentum from property.

It picks prices to come down, with five of its 10 indicators negative, one neutral with a negative bias, one neutral, two neutral with a positive bias and one positive.

Serviceability and indebtedness, liquidity, globalisation, mortgagee sales and median rent were all negative for house prices, though most indicated the worst of the global financial crisis is over.

Interest rates was neutral with a negative bias with "some action at the longer end of the curve".

Affordability was back to more normal levels, though still shaky, and was deemed to have a neutral effect house prices.

The supply-demand balance, consents and house sales were neutral with a positive bias, with room for new construction, while migration remained the perpetual positive for house prices as a growing population requires housing.

Still, the bank's economist warn a rise in emigration to Australia could be on the cards after the so-called ‘lucky country' avoided a recession and has seen its unemployment rate steadily decline.

In conclusion, they decided there were jittery times ahead.

 

 

Likely Tax Changes for Investment Properties - update Feb 12th

The big news in the Government’s opening parliamentary speech is the comments about trying to extract extra revenue from the residential property sector, which they believe and we think, unfairly is not paying its way. After ruling out capital gains, land taxes and the notional return, the two areas the Government is likely to target is depreciation and how much in the way of losses can be claimed. There are two types of depreciation, one on buildings or improvements and the other for chattels The change, we understand, will only apply to buildings or improvements.  The second change, hinted at, may be ring fencing losses to a certain level or restricting their offset to property income. The Government must be careful in changing of the rules regarding property investment as many people have their only form of superannuation tied up in this sector. Secondly the Government should be encouraging the landlords to continue improving their properties and so improving our housing stock. These changes will not do this. If this sector is made unattractive to invest in, there will be fewer investors - this may well lead to a rental accommodation shortage and hence higher rents. 

A conversation this week with my local National MP Katrina Shanks has confirmed the Governments dedication to closing the tax "loophole" around rental properties by ring fencing losses. For people who have purchased rentals in the last five years, this will make a huge difference to their annual cashflow. Many will not be able to absorb the costs personally and so will sell. Others will review rents. Expect price adjustments downwards in the short to medium term and rent adjustments up especially in the medium term.

 

 

Listings still in short supply in Wellington - Feb 2010

 For the first time in four years the number of new properties listed for sale in January was less than that in December, real estate industry website Realestate.co.nz says. The figures were published today in the website's monthly report of market activity.

 

Realestate.co.nz chief executive Alistair Helm said just 10,272 new listings came onto the market in January, down from 10,349 in December. It was the first time in four years that the January figure had been lower than December, with the New Year traditionally showing a strong lift in listings to take advantage of increased summer activity.

 

Also, the national asking price in January fell to $405,040, a 1.8 percent drop from December's figure of $412,319, and a further slide of 3.5 percent from November's $419,586, Mr Helm said.

The January figure remained 5.6 percent below the market peak of October 2007 when the asking price reached $429,033.

Even with some vendors lowering their price expectations, buyers appeared to be biding their time in the expectation that prices would fall further in an increasingly crowded market.

"The level of sales remains static, showing no significant improvement. As a result, the inventory level of unsold houses has shot up significantly, as measured by the number of weeks of sales necessary to clear properties on the market," Mr Helm said.

In December, the inventory level was 34.3 weeks, but that jumped to 40.1 weeks in January, the highest since April last year.

"All three key indices from the January statistics, ie asking price, new listings and inventory level, show an absence of expected seasonal swings. This lack of typical seasonality underscores the state of dormancy within New Zealand property, and further highlights the fact that it continues to be a buyers' market."

 

 

Wellington property Trends - Qv.co.nz Feb 2010

Property values in the Wellington region increased by 5.7% over the past year (calculated over the three months ending January 2010 in comparison to the same period last year), an improvement on the 4.6% annual growth reported in December. The average sale price for the region increased from $448,652 to $460,638.

Mr. Pieter Geill of QV Valuations said; “Apart from being quite slow over the holiday season, the residential property market in and around Wellington has been fairly contradictory. Some properties are selling quite fast, while others seem to linger on the market for a long time, usually as a result of overpricing. Buyer attitudes also seem to have hardened somewhat and people are generally making property decisions more cautiously than in October and November last year, despite the shortage of listings over this period”.

“We have been saying for the last couple of months that we expect more properties to come to market in the near future. Anecdotally, this seems to have started occurring in the Wellington region from late January and continues presently. We are seeing more vendors taking time to seek valuation advice prior to sale, and we are still seeing forced and mortgagee sales trickle through. If a flush of housing does come to market without an equal number of buyers to balance, we may well see values ease. Prices are generally holding well for now though” Mr. Geill

 

The housing market in 2009 - QV.co.nz  January 2010

 

According to the latest residential price movement index released by QV, New Zealand house values rose 2.8 percent over 2009, and are now only 4.9 percent below the peak of the market. The average sales price also rose to $404,671. This ends a year that showed a dramatic and somewhat unexpected level of turnaround in house values.

Driven by the main centres, nationwide values rose 5.1 percent between April and the end of the year to finish 4.9 percent below the market peak. Within this the main urban areas increased 6.5 percent since April and now sit just 3.9 percent below their peak of 2007.

Values in the Auckland Area rose 5.1 percent during 2009, the Wellington Area and Christchurch both rose 4.6 percent, and Dunedin rose 4.9 percent. Hamilton grew only 1.8 percent and Tauranga ended the year with an increase of 0.1 percent.

Whitehead said “while the numbers look somewhat dramatic, and there were calls in the market place of a pending boom, the market continued to be subdued by low stock levels in the main centres, and the continued cautionary nature of bank lending”.

Read the latest monthly report at www.qv.co.nz.

 

 

QV release December 2009

Wellington Property Trends

 

Property values in the Wellington region increased by 2.9% over the past year (calculated over the three months ending November 2009 in comparison to the same period last year), a substantial improvement on the 1.6% annual growth reported in October. The average sale price for the region remained relatively stable at $438,148.

 

Mr. Kerry Buckeridge of QV Valuations said: “As far as values go, the Wellington region is holding a fairly steady trend of increasing values, along with most of the country’s main centres. Well presented homes in traditionally strong locations are still attracting good offers, and there seems to be a decent amount of activity in higher price brackets”.

 

“It is possible however that we are starting to see the beginnings of a change. In the last couple of weeks we have heard reports that an increased number of properties are coming to market. This could be the start of a very late spring resurgence, which until now has not existed in any shape or form. The upward pressure placed on values in recent months by the well-documented shortage of listings just may be enticing sellers back into the market. It is expected that any significant increase in listings will help to bring balance to the market, and ultimately soften the upward value trend” Mr. Buckeridge said.

 

“Also worth mentioning is the popularity of renovations amongst home owners at present. We are getting a significant amount of work from would-be buyers who struggled to find what they were looking for in Wellington’s under-stocked property market. These people have decided to stay put for the time being, and spend money altering their existing property to meet their needs. Some of the renovations we are seeing are fairly substantial too, sometimes hundreds-of-thousands of dollars” said Mr. Buckeridge.

 

 

 

 

Breaking the changes into price bands gives us a more accurate picture of the value changes. Prices at the top end of the market (over $800k) have dropped just under 2%, and at the bottom end (under about $350k) have remained static. There has been moderate growth across the rest of the market with houses between $350k and $500k growing around 3%. Houses around the $550k mark have increased in value the most as there has been strong competition in this part of the market and relatively few properties for sale. However at just over 4% this is still modest growth in comparison to some value groups in other cities.

 

 

 Wellington Property Trends - November 2009

 

Property values in the Wellington region increased by 1.6% over the past year (calculated over the three months ending October 2009 in comparison to the same period last year), an improvement on the 1.1% annual growth reported in September.

The average sale price for the region increased from $436,633 to $438,584. Wellington City Council ratepayers have recently received their updated Rating Values from QV. Rating Value changes are over two years and are therefore not comparable to the year-on-year figures quoted above.

 

"The shortage of listings in Wellington and the Hutt Valley continues. The traditional spring resurgence which we would normally see at this time of year is still holding off and is putting upward pressure on prices. Good homes are attracting competition amongst buyers, especially at tender which seems to be an effective sales method in this scenario," Pieter Geill of QV Valuations said.

 

"Interestingly, the upward price pressure seems to be localised to main centres. In more provincial areas of the Wellington region there seems to be more listings and less competition amongst buyers. Supply and demand are more balanced in these areas which is alleviating any substantial price increases for the time being. This situation is especially prevalent in areas where batches and second homes are traditionally popular," he said.

"There still appears to be mortgagee and distressed sales around, and I believe these will hover for the medium term. Although some borrowers are benefitting from the current floating rate, interest rates are rising again and unemployment is predicted to reach 7%," Geill said.

For further info visit www.qv.co.nz

 

"The regional make up of the market from an inventory perspective points to a growing buyers market with 11 of the 19 regions showing inventory levels as measured in weeks of equivalent sales running significantly above long term averages.

The only conspicuous regions reversing this trend are the 3 metropolitan regions of Auckland, Wellington and Canterbury all of which are showing inventory levels well below long term averages and well below the national average.

These major metropolitan regions are showing characteristics more akin to seller’s market and has prompted some to speculate an emerging property bubble. The breadth of data by reach region clearly refutes this assertion."

- realestate.co.nz - november 2009 market report

 

 

 

 

Wellington Property Trends - October 2009

 

 

Property values in the Wellington region increased by 1.1% over the past year (calculated over the three months ending September 2009 in comparison to the same period last year), an improvement on the 1.4% annual decline reported in August. The average sale price for the region increased from $431,614 to $436,633.
Kerry Buckeridge of QV Valuations said; “The fact that we are now experiencing year-on-year growth in Wellington is the strongest evidence yet that we have had a complete turn-around in the City’s residential property market from last year. Values have slowly but surely crept up over the last few months, with the typical spring flush yet to eventuate, and therefore, yet to take buying pressure off existing housing stock. Subsequently the average number of days required to sell a property continues to fall. In short, this is a seller’s market. Buyers are often missing-out due to increased competition, and many investors are rethinking their buying strategies. The days of cheeky offers are gone for now”.

“Interestingly, we have started to note more movement of higher priced properties in the Wellington area. Such housing stock has been very slow to change hands for the past year, but activity in the million-plus bracket is starting to trickle through into sales. This may be a sign of the times, as confidence slowly returns to the country’s economy, and also may be a flow-on effect from activity in lower price brackets” said Mr. Buckeridge.

“It will be interesting to see where we go from here. Many market commentators would not have picked the five-month-long value recovery we are currently experiencing. It should be noted however that value increases are not vast, but have served to stabilise values from where they were headed. In Wellington we are also more subject to public sector restructuring which could, if it eventuates, have a negative impact on property values in the future” said Mr. Buckeridge.

 

 

Wellington Property Trends - Sept 09

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.

 

 

Property: Ride it out or leap?

 

 

TONY ALEXANDER:

The case for hope

Quotable Value statistics show values nationally are now 8.5 per cent below their peak level, but Alexander says the market is rising again, and will continue to do so.

He says those who have been preaching doom in the housing market have been wrong, slating "silly forecasts from wayward pundits" that prices would fall more dramatically.

He told the Herald on Sunday he was not referring to Trass.

Alexander's optimism is based on four economic fundamentals: unusually low interest rates attracting buyers into the market; an under-supply of houses; a dearth of new home construction, and a burgeoning population.

However, he does not think we are facing another boom.

Lending criteria are tighter and the rate of lending to the housing market is still weak, only growing about 0.2 per cent a month.

Prices have only risen 2.2 per cent in the past three months after falling a long way, and he says there is still too much uncertainty to predict how much they will rise in the next three years.

And he says there is an oversupply in certain market segments: seaside property, regions dependent on dairying and tourism and Queenstown apartments.

KIERAN TRASS:

We're still falling

Even though prices have been climbing, the increase is a false start, says Trass. He maintains values will fall up to 25 per cent in some suburbs during a slump he says will last until at least 2011.

Trass is so certain the market is still going to crash, he suggests buyers offer 10 per cent less than a property's valuation.

Buyers need to pay a price that takes into account the market being volatile for quite some time, he says. If the vendor will not accept it, move on. "People often fall in love with a property," Trass says. "But there are thousands of properties you can fall in love with - it's just that you haven't met them yet."

It's silly for people to race into the market now because they are scared of missing out, he says. This is the same fear that set people up to lose money at the end of the last boom when they believed that if they did not buy then, they would never be able to afford to.

"Smart people wait for the recovery to be established to the point where there is no doubt there is a recovery," says Trass. "It's not going to take much longer and this market is going to stop in its tracks."

The purpose of a slump is to take prices back closer to their fundamental values, Trass says, but property remains unaffordable by historic standards.

While the boom lasted five years, we are only two years into this slump, and Trass says: "I can't find another market that's come out of a slump in half the time of the preceding boom. The property cycle has its own gravity."

Pros and cons

BNZ's chief economist Tony Alexander says these things will underpin the New Zealand housing market:

1 Floating interest rates have hit a 40-year low that will drag extra buyers into the market.

2 New Zealand entered the recession with an under-supply of housing.

3 The country has the lowest level of housing construction since the 1960s. We need 23,000 built each year for a growing population, but fewer than 14,000 are being built annually.

4 We have accelerating population growth. The net migration gain in the year to July is 14,500 and is headed for 25,000. The average for the past 10 years has been 11,000.

Property cycle expert Kieran Trass says the market is not over the worst because:

1 Next year interest rates are going to rise some economists are saying by 3 per cent. Buyers who could not absorb this should bide their time and save.

2 There is no uniform under-supply of housing. There's a shortage in the better locations of main urban areas and over-supply in others.

3 We haven't been building many houses because it is too costly. The market adjusts through more people living in each household.

4 Migration looks positive - but it cannot be looked at in isolation.

NZHerald

 

 

New Zealand House Market Update August 2009

 

A shortage of residential listings in the three main centres, just ahead of the traditional spring upturn in real estate activity, indicates home sellers currently have the upper hand over buyers in the property market.

That is one observation made in NZ Property Report, a monthly survey of market activity compiled by Realestate.co.nz, the country's most comprehensive property listing website. The latest issue, covering August, has been released today.

According to NZ Property Report, the level of 'available inventory' nationally - the number of weeks it would take to sell the country's entire available stock based on average sale times - was down 34% on a year ago.

A scarcity of new listings in the main centres, however, meant that the drop in inventory levels in Auckland, Wellington and Christchurch was even more pronounced, down between 41% and 45% on August 2008.

``The arrival of spring typically signals a surge in residential property market activity, but with inventory levels low this year - particularly in the three largest centres - vendors may be encouraged to increase asking prices,'' says Alistair Helm, CEO of Realestate.co.nz.

``That has not happened yet,'' Helm adds. ``Our report shows asking prices remained essentially unchanged between July and August, and remain 7% below the peak they reached in October 2007.''

Nationally, the average asking price for a property in August was $397,187 - compared to $396,949 in July and $403,107 in June.

Helm said the combination of little movement in price expectation, the number of listings, and inventory over recent months meant the market could be considered stable at present.

If potential sellers continued to hold off listing the0069r properties, however, the shortage of available stock could push prices up over the coming months.

The full NZ Property Report can be found on Realestate.co.nz's Unconditional blog at: www.realestate.co.nz/blog.

Realestate.co.nz is the official website of the New Zealand real estate industry, and provides the most comprehensive selection of listings across all categories of real estate. Realestate.co.nz lists over 100,000 properties at any one time, representing over 90% of all listings currently marketed by real estate professionals.

 

 

July 2009 - Values up for three months straight and still rolling - qv.co.nz

 

Property values in the Wellington region declined by 4.0% over the past year (calculated over the three months ending July 2009 in comparison to the same period last year), a substantial improvement on the 6.5% annual decline reported in June. The average sale price for the region decreased slightly from $430,939 to $429,571.

Kerry Buckeridge said, "Residential property values have moved in a positive direction for the third consecutive month in Wellington. If this is an aberration before another down-turn, it certainly is an extended one. I have noted good attendance at open homes with buyer attention focused on most parts of the market. We have seen an increase in mortgagee sales, but given market sentiment and the current shortage of listings these are often attracting good buyer interest".

"We have recently noticed a decreased number of valuations being requested out of the residential market. This could possibly be driven by the school holidays and the recent bad weather, so is probably more a seasonal trend. This may give some indication that actual sales activity is slightly more subdued, despite heightened buyer interest," said Buckeridge.

"A significant number of relatively cashed-up expatriates are returning to New Zealand and are all in need of housing. Countering this, and of particular importance in Wellington's property market, is the effect of public sector restructuring. Already there have been a reasonable number of redundancies and government contractors are getting less work. If people's incomes are under threat they are less likely to be strong participants in the property market" Buckeridge said.  

"I think most people believe we have seen the worst of the residential market downturn in Wellington, but of course it is impossible to say at this stage. The value recovery experienced thus far has been off the back of some very finely balanced economic forces and a small shift in any of these could change the current trend. The foreseeable future presents a standoff between immigration and unemployment, which could tip the scales either way," said Buckeridge. 

 

 

 

QV.co.nz Housing Survey - June 2009
Increased optimism for the property market

In the second quarterly survey of the New Zealand housing market carried out by QV.co.nz there are signs of improving optimism.

There were plenty of positive comments about the strength of the market in some areas. Good quality, well presented properties were noted to be holding their value well, amid a recent sharp increase in buyer activity. Property values and lower interest rates mean that nearly 6 out of 10 respondents still believe that now is a good time to buy.

Expectations of house price changes over the next year remain negative, although they have improved considerably over the quarter.

There was a strong sentiment expressed by some respondents that the current stability in the property market can't be sustained, and that negative signs in the global and New Zealand economies must impact house prices. There was also a commonly expressed view that New Zealand house prices have become increasingly unaffordable and that a correction is necessary, and that the worst was yet to come. However the results of the survey show that the number of people holding this view is declining with only a quarter of the respondents expecting further significant declines in property values compared to nearly half the respondents holding this view in our March survey.

There has been a strong increase in the number of people considering buying within the next twelve months, but also a sharp decline in those considering selling. The timing of their activity within the next twelve months has also changed since the March survey, with more people now intending to hold off for at least the next six months. However a higher percentage of those intending to sell are looking to do so within the next three months. This may mean the market will remain more active during winter despite the overall decline in people intending to sell within the year.

Property values remain the most common reason to buy or sell within the next year. Interest rates also rank highly, although have less influence than last quarter due to recent rises in mortgage rates. Signs of increasing unemployment have pushed up job security as an influencing factor.

Looking to buy or sell investment property remains a key reason for people to get back into the market, and is at the same level as our March survey. The number of people looking to upgrade or downsize has also risen, but those looking to move to another area, buy their first home, or buy their first investment property have dropped.

Overall, the qv.co.nz housing survey suggests improving confidence, balanced with some caution:

# A net 38% of respondents believe that now is a good time to buy, up from 30% in March.
# Respondents expecting house prices to decrease over the next twelve months has dropped considerably from a net 50% in our March survey to a net 21% in June.
# Of the main factors influencing the decision to buy or sell, 51% of respondents listed property values, 32% listed interest rates, and 29% listed Job Security.
# 46% of respondents are considering buying in the next 12 months, and 32% selling.
# 31% of respondents listed investment property as the main reason for buying or selling.

More at www.qv.co.nz

 

 

 

House Sales are More Stable Nationally - May 09

 

March sales figures were excellent and April’s figures will be pretty good as well.  This has been confirmed by the Real Estate Institute of New Zealand. In April there were 6,210 house sales - slightly down on March at 6,694 but well up on April the previous year when only 4,450 properties sold.  This was expected, as April is one day shorter than March but Easter fell in the middle of the month.  The breakdown of house sales by pricing brands show that 64% of house occurred under $400,000, a further 24% in the $400 - $599,999 bracket, 10% in $600 - $1,000,000 price range and 2% over a $1,000,000. May's figures will be interesting as this will confirm whether or not there is an upward trend.

 

Quoting from the latest QV media release regarding Wellington...

 

Mr. Kerry Buckeridge of QV Valuations said; “From these latest figures it is obvious that the encouraging signs we have seen in the market place over the last couple of months have had a positive affect on values in and around Wellington. Increased buyer interest and enquiry was followed by increased sales volumes, which has now translated into healthier prices. It is of course impossible to tell at this stage whether this is an actual house market recovery in Wellington, or if we will see further falls through winter.”

“Of particular interest at the moment is the shortage of listings throughout the Wellington region, which is obviously lending a hand to sale prices. The shortage can anecdotally be attributed to a few factors. Firstly, the pricing gap between the unrealistic sellers of last year and the cheeky buyers of late has all but closed. Pricing expectations are now clearer for buyers and sellers, ultimately resulting in listings being sold. Secondly, there is uncertainty in the market place, so vendors who don’t have to sell won’t. Lower interest rates are obviously having an affect too, as housing affordability has improved and is bringing first home buyers into the market. It is also worth noting that housing supply traditionally dwindles coming into winter” Mr. Buckeridge said.

“More established investors are certainly making a comeback, as the prospect of positive returns is back on the cards. It seems that savvy investors with portfolios are leading the pack, as they are more likely to meet bank lending requirements. For this group of buyers the numbers really have to stack-up. Capital gains aren’t too high on the agenda, so rental returns need to make any potential outlay feasible” Mr. Buckeridge said.

 

 

'Cautious optimism' in housing market - August 09

 

The latest housing statistics released by the Real Estate Institute of New Zealand (REINZ) reveal a spike in terms of sales volume. However, Institute president Mike Elford said while the figures in terms of sales volumes, prices and days to sell are cause for “cautious optimism” it is too early to predict recovery.

   “We need to read the figures in the context of December, January and February figures being light months in terms of volume. And while there is certainly a significant return to healthier numbers, we also need to be mindful we are now coming into a period of seasonal drop off in sales.”

   Nevertheless, Mr Elford said, the total number of homes sold nationwide in March – 6,694, up from 5,228 in February and from 5,129 in March 2008 – is consistent with the information he’s been receiving from the industry around the country. “I’m hearing that March was the best month for some time with properties available for sale and genuine buyers and sellers ready to meet market prices.”

 

Renewed interest in real estate

 

   The median price for homes across New Zealand at $335,000 for March 2009 is slightly up on February’s $330,000 and on a par with the March figure from 2007 of $343,500 but down on the comparable period in March 2008, $349,000, equivalent to 4.01 per cent. “The indications are that there is renewed interest in the real estate market stimulated by the drop in interest rates and the affordability of properties,” Mr Elford said. “We’re seeing investors back too, moving away from equities and returning to controlled investments such as real estate.”

   Of interest in this month’s figures is the weighting of property sales in the under $400,000 price band – 4,260 of the total sales of 6,694, followed by 1,623 sales in the $400,000 to $599,000. There were 163 sales of properties $1 million and over – nearly half the number that sold in the same period in 2007 (368) although this was from a total of 10,989 sales.

  

Home loan affordability little changed from last month

It now takes 55.5% of one median income to pay the mortgage on a median priced house purchased in March, up from February’s 54.0%. A typical buyer is assumed to be in the 30-34 age group. This is according to the latest index published by interest-rates.co.nz. This index was 82.5% a year ago and 51.7% five years ago. The affordability index reached its highest point of 82.9% in November 2007.

 

According to interest-rates.co.nz the median income for the typical buyer is not high enough to buy a median priced house, even with a 20% deposit. They state that buyers may find the lower-quartile priced house is affordable and that a couple/family with more than one income may find the median house price is affordable. The standard buyer index is calculated assuming that the house buyer has already has a 20% deposit. Interest-rates.co.nz state that the key drivers of home loan affordability are house prices, after tax income, disposable income, and mortgage payments.

 

Households better placed than a year ago

 

Based on interest-rates.co.nz standard household profile, it now takes 36.3% of the median take-home pay to service a mortgage of a median home purchased in March. Median-priced housing is now affordable for families in New Zealand when both adults work. This is down marginally from 35.3% in the previous month, February. A year ago, it was 54.1% - five years ago it was 34.1%.

 

Wellington Region sale volumes up

 Wellington’s median price increased slightly to $376,000 in March from February 2009’s $375,000. (March 2008: $410,000). The number of sales was up at 755 for March, compared with 639 sold in February 2009. (March 2008: 603).

 

 UPDATE Jan 2009 - from QV.co.nz

 

The property market in 2008

2008 has been a pivotal year for the NZ property market with a sustained drop in property values for the first time since 1998.  QV's December Residential Price Movement report shows property values fell by 7.4% during the year. 
"Property values held reasonably flat through the first three months of the year, but the decline kicked in through the autumn and winter months, during which time values dropped 6%.  With the significant drops in interest rates over the past three months, there has been an increase in market activity and values appear to be flattening again" said Mark Dow of QV Valuations.
 
"To keep 2008 in perspective it's useful to look back at the activity of the past two decades.  Property values grew by 120% between 2002 and mid 2007. By way of comparison, the last period of sustained growth occurred between late 1992 and the end of 1997 when property values increased by 54%" said Dow.  "After such a period of sustained growth it's inevitable that we will see a correction.  The question remains how long this period of falling property values will continue."
 
"It's also interesting to look at the types of properties selling at the different stages of the property cycle. Between 2000 and 2003 the number of house sales more than doubled, with a dramatic increase in the proportion of lower value property selling.  In the years 2004 to 2007, the number of house sales remained fairly steady, as did the proportion of low, medium and high value sales.  During 2008, the number of house sales fell dramatically and the proportion of lower value properties selling significantly decreased.  This pattern reflects the wider drivers of the property cycle.  When the economy is strong; job prospects are good and immigration is increasing, then demand for houses, particularly first homes, pushes prices up.  As the economy weakens and affordability becomes a real issue, first home buyers are usually the first to suffer; sales volumes drop and activity in the market moves back to mid to higher end properties as we saw through 2008" said Dow.

Our December report showed a 7.4% decline over the past year (calculated over the three months ending December 2008 in comparison to the same period last year) while the average New Zealand sale price for December increased slightly to $378,605.
All the main centres showed further declines in property values.  In the Auckland Area values dropped back to -8.0% from the -7.4% reported in November.  Hamilton values fell to -9.3% from -8.5%, Tauranga to -9.0% from -8.4%, and the Wellington Area to -6.9% from the -6.0%.  Christchurch and Dunedin followed the same trend dropping to  8.0% and -7.7% respectively.

Most of the main provincial cities followed the national trend with property values easing further. Whangarei dropped  8.6%, Napier  8.1%, Nelson  7.6%, and Invercargill  9.1%.  However, a number of areas bucked the trend most notably popular summer destinations like Queenstown whose property values dropped to  10.6% from the -12.5% reported in November, and Gisborne to  5.8% from  9.6% last month.

 

 

 

UPDATE 10th November 2008 - further decline in values

Property values in the Wellington region decreased by 6.1% over the past year (calculated over the three months ending October 2008 in comparison to the same period last year), down from 5.4% decline reported last month. The average sale price for the region decreased to $411,228 from $424,098 in September.

"The pattern of declining values and average prices is clear and persistent.  The expected surge of Spring activity has not arrived and this is certainly not helped by the current financial circumstances.  However, there are some reports from Real Estate agents that there is a lift in buyer enquiries from both the bargain hunters and home owners who don't want to wait any longer" said Max Meyers of QV Valuations.

"The biggest decline in property values across the Wellington region occurred in Lower Hutt with -9.2% year on year, and the smallest in North Wellington with -3.9%. Within our region, some areas show a stark contrast in property value growth with that reported a year ago. Upper Hutt has moved from 19.8% (year on year) growth in October 2007 to a 7.2% (year on year) decline in October 2008. Lower Hutt has moved from 19.9% (year on year) growth in October 2007 to a 9.2% (year on year) decline in October 2008" said Mr Meyers.

The market movement is clearly shown by the table below, where a significant proportion of sales around Wellington achieved a price lower than the 2007 council rating values.

Area % of sales which occurred below 2007 Rating Value
Porirua     67.7%
Upper Hutt    77.5%
Lower Hutt    83.3%
Wellington    72.5%

"Looking ahead I see the current trend continuing into the New Year, while buyers take full advantage of attractive buying opportunities" said Mr Meyers.

Source www.qv.co.nz

 
 

Residential Property Market Steady In September – REINZ

10 Oct 2008

 

The world’s financial markets may be in turmoil, but they’re showing little dramatic effect so far on the New Zealand residential real estate market, according to the Real Estate Institute of New Zealand (REINZ).

 

President Mike Elford says the September figures reveal no dramatic trends and are relatively constant with last month’s result, albeit in a sluggish market, with 4,499 sales recorded compared with 4,220 in August.

 

“The median house price overall remains unchanged in September compared with August at $330,000. The relatively small increase in the number of properties sold indicates a slight degree of recovery, but that is what we would expect in a spring market after a harsh winter,” Mr Elford says.

 

He believes the lower than normal volume of properties being listed is a reflection of people’s resistance to realising losses on the value of their property.

 

He believes they are also waiting to see what the Reserve Bank will do with the Official Cash Rate.

 

“There was little impact on the housing market with the 0.5 percent cut last month. It will be interesting to see if the cut anticipated later this month has any effect. We would hope to see some relief with the retail banks dropping their interest rates.

 

Whether the international scene will have an effect is more likely to be revealed when the October results become available, he says.

 

The average number of days to sell a house remained on a par with last month (52 in September compared with 55 in August which in turn was a drop from 58 in July) but is still 20 days more than the average 32 days in September 2007.

 

Around the regions, four out of 12 areas experienced rises in median price house sales compared with August 2008, seven were down and one region, Canterbury/Westland remained constant. The Canterbury/Westland region stayed steady on the median house price of $290,000 on total sales of $235,711,243.

 

Northland was one of the regions to rise, recovering from its drop to $285,000 in August to $297,500 with total sales value of $39,815,000

 

The other regions to rise were Hawkes Bay up to a median of $271,742 from $265,000 in August on total sales of $43,479,203; Taranaki to $256,583 from $250,000 on sales totalling $46,527,141; and Central Otago Lakes up to $480,000 from 465,000 on sales of $40,719,500.

 

Auckland dropped slightly from median prices of $423,500 in August to $420,000 in September on total sales valued at $705,330,907.

 

Waikato/BOP median house sales also fell slightly in the flat overall market. Last month’s figures were $316,000 compared with $314,350 in September with a total value of $237,934,405.

 

In Manawatu/Wanganui total sales were $58,605,350 with median values of $225,000 compared with $231,000 in August. Similarly, the Capital experienced a slight drop in median values from $375,000 in August to $350,000 in September with total sales of $201,256,733.

 

Meanwhile in Nelson/Marlborough, median house values dropped from $328,000 to $320,000 on total sales of $80,195,997.

 

Further south the picture was similar in Otago down to $221,500 from $230,000 on sales of $57,519,978 and in Southland a slight dip down to $197,000 from $190,000.

 

In percentage annual comparisons, figures are down in all 12 regions apart from Central Otago Lakes which sees a 0.52 percent increase over the corresponding period in 2007.

 

Northland is down 7.03 percent, Auckland 4.86 percent, Waikato/BOP 2.60 percent, Hawkes Bay 4.65 percent, Manawatu/Wanganui 6.25 percent, Taranaki 3.17 percent and Wellington 7.79 percent. In the South Island, Nelson Marlborough is down 3.10 percent, Canterbury/Westland down 7.93 percent, Otago 6.14 percent and Southland 4.10 percent.

 

Overall, the New Zealand percentage decrease over the past year is 6.11 percent.

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www.reinz.co.nz

 

11th August 2008 update

QV's July statistics for the residential property market report a 2.2% decline in national property values over the past year (calculated over the three months ending July 2008 in comparison to the same period last year), down on the 0.1% growth reported in June. The average New Zealand sale price stayed steady at $393,370.

"Property values continue to fall across the country with almost all areas now showing values lower than they were 12 months ago.  Of the main urban areas only Invercargill is showing any significant growth at 5.4%, but the trend is also slowing there." said Blue Hancock of QV Valuations.

 "The market is now well off it's peak of late 2007, early 2008 with many sellers accepting the state of the market and dropping their expectations accordingly.  As a result we are seeing an increase in activity in the market, although sales levels are still well below last year and long term averages" said Hancock.  "The question has now changed from when will prices stop rising, to when can we expect to see them stabilise?  This as always will be driven by market demand, and the age old factors of numbers of buyers versus numbers of sellers, and perceptions of when properties represent fair value."

Across the Auckland area property values are 3.6% down compared to the same time last year, declining further from the -1.0% reported last month.  Hamilton City's values have slipped further to -5.4% and Tauranga to -2.6%.  The Wellington area is now also showing declining values, falling from 1.1% reported last month to -1.2%.  Christchurch has dropped further back to -2.1% and Dunedin to -6.8%. 

Most of the main provincial centres are now showing property values less than the same time last year.  Gisborne dropped sharply to -8.7% and has dropped spectacularly from the highs of last July and August where year on year values were increasing over 25%.  Whangarei has declined -0.6%, Rotorua -0.4%, Napier -2.0%, Hastings -1.7%, New Plymouth -4.7%, Wanganui -1.3%, and Palmerston North -5.2%.  Nelson dropped further to –2.7% and Queenstown Lakes to -3.1%.  Invercargill shows year on year growth of 5.4% although this has dropped from a high of 36.4% last October and as recently as March year on year growth was at 21.9%.  At the current rate of decline it will join the rest of the main centres with falling property values within a month or two.

What's happening in Wellington?

Property values in the Wellington region decreased by 1.6% over the past year (calculated over the three months ending July 2008 in comparison to the same period last year), down from 1.1% growth reported last month. The average sale price for the region decreased to $451,869 from $456,035 in June.

“Most of the Wellington area is showing declining values now compared with the same period last year.  The QV statistics show the Wellington region down -1.6% with the biggest decrease being in Upper Hutt at -3.3%. Kapiti remained the same, Porirua showed a 0.1% increase and the Eastern Suburbs showed a 0.5% increase.  The important point to appreciate is these figures are clearly showing a strong and persistent declining trend for the whole of this year” said Max Meyers of QV Valuations.

“Sales in the city areas which underwent a council revaluation last year (Porirua, Upper Hutt, Hutt and Wellington) are now selling predominantly below the rateable values (RVs), to a greater extent than was evident last month.  This confirms the declining trend with 75% of Porirua sales below the RV, 67% of the Upper Hutt sales, 64% of the Lower Hutt sales, and 67% of Wellington sales below the 2007 rateable values.  We are also hearing of greater variations in individual cases, particularly with properties that are hard to sell” said Mr Meyers.

“Conditions indicate the market may fall further with a prolonged period of low sales, long selling times and limited finance.  This is beginning to show up with an increasing number of mortgagee sales and much lower asking prices.  We have heard of some Hutt Real Estate Agents reducing asking prices by 20% to achieve a sale” Mr Meyers said.
 
“Some properties are being hit particularly hard by the declining values.  Those that have significant issues to deal with have become very difficult to sell as buyers have; choice, limited budgets, less time and are less prepared to take on the challenge.  Dated properties, leaky homes, and properties with overgrown sections are noticeably affected.  There is also some evidence to suggest that the residential areas more distant from the city are being affected more because the cost of travel is being felt more acutely” said Mr Meyers.

“As we close in on the year end the market normally has an increase in activity and we expect this occur to some extent this year, but we expect pricing to be even more competitive.  This may provide good buying opportunities but significant price/value decline.  After Christmas the seasonally higher level of demand and more sales can be expected and this is the time when the market could stabilise for a more settled period” said Mr Meyers.

 

July 14th 2008 update

 Property values in the Wellington region increased by 1.1% over the past year (calculated over the three months ending June 2008 in comparison to the same period last year), down from 3.4% reported last month. The average sale price for the region increased to $456,035 from $436,635 in May.

“Whilst property values in the Wellington area show 1.1% year on year growth, the trend confirms we are entering a property market with declining values. This is supported by the fact that over 50% of the sales in Porirua, Wellington, Upper Hutt and Hutt City are now below the Rateable Value (RV) that were effective in August and September last year” said Max Meyers of QV Valuations.

“The number of transactions taking place is continuing to fall and this will affect prices because of the particularly low level of demand.  This is partly the result of the over-active property market we have experienced in the last couple of years. Based on a typical market response, a correction to the high number of sales and high prices levels is to be expected.  However, of greater concern is that the low demand is also influenced by an affordability issue and the current economic outlook and these influencers are taking buyers out of the market and holding prices down” Mr Meyers said.

“Properties that are both well presented and well located are opening up a bigger price gap on those that are offered with some less attractive features.  All are being more competitively priced and this trend will continue with more significant discounts required to appeal to current buyers.  Buyers now have the ability to choose what best suits them and should take the opportunity to do their research on several properties so they can find the negotiable sellers and make competitive offers while there is the opportunity to do so.  There should be some good buying this side of Christmas for those that are prepared” said Mr Meyers.
 
“An unexpected feature of the current QV results is the increase in average sale price in most Wellington region locations in June. This is attributable to a changing mix of the properties being sold, with a decline in the number of sales of properties under $500k” said Mr Meyers.

Information sourced from the publicly released property value map by Quoable Value Ltd. For more information visit them at www.qv.co.nz