QV says property values rose rose slightly in Feb from Jan, but still 1.7% lower than a year ago and 5.6% below late 07 peak

QV says property values rose rose slightly in Feb from Jan, but still 1.7% lower than a year ago and 5.6% below late 07 peak

By Bernard Hickey

Government owned valuer Quotable Value (QV) has reported property values rose slightly in February from January and have generally stabilised after falling through much of 2010.

However, QV said prices were variable across New Zealand with prices rebounding in the main centres, but still falling in rural and provincial areas.

Values were still 1.7% below a year ago and 5.6% below their peak in late 2007.

“Values for all New Zealand have levelled off in recent months, but this is mostly due to a rebound in values in the main centres. In contrast, values in the rural and provincial areas have generally continued to decline” said QV.co.nz Research Director, Jonno Ingerson.

“Overall the property market remains subdued with lower than normal numbers of listings and sales being the main signs of buyer and seller caution. However there are pockets of the market that remain active, particularly in the main centres," Ingerson said.

“There is variability in how values have changed over recent months, even within the main centres. Values across the Auckland area increased in the last month, particularly in central Auckland, with the rest of Auckland remaining more or less steady. Values across the wider Wellington area were steady, but increased in Hutt and Upper Hutt, were flat in Wellington City, and decreased in Porirua. In contrast values in Hamilton and Tauranga have continued to steadily decline,”  he said.

“In Christchurch, the market took a while to start moving again after the September quake, but once it did there were some positive signs. Increased demand for undamaged houses saw prices lift by a few percent in the subsequent months and in February values were 0.3 percent above the same time last year. The much more widespread damage caused by the February quake will again cause sales activity to slow for several weeks or even months. It is too early to tell what the effect on values of relatively undamaged houses will be."

While unrelated to the QV index, and a less reliable measure of value change, the average New Zealand sales price over the last three months is NZ$411,712 which is slightly up on the NZ$409,067 reported last month.

The continuing slide in values in recent months means that none of the provincial centres now have values above the same time last year.

Compared to this time last year Whangarei is -5.3%, Rotorua -3.2%, Gisborne -7.0%, Hastings -2.8%, Napier -0.5%, New Plymouth -3.0%, Wanganui -4.3% and Palmerston North -3.6%.

In the South Island Nelson has now dropped below last year by 0.1%, while recent increases in value mean that Queenstown Lakes is only 0.3% below last year, and Invercargill 2.8% below a year ago.

More soon.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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Some decent sized year on year losses for the provincial centers. People going to where the jobs are and possibly people moving from chch to aucks.

Economy and jobs outlook going to make any price gains very hard to maintain next few years, more losses in real terms is my pick

Read these lies.

With inflated house price, less jobs and no pay increase, how come "First home buyers appear to be the main group purchasing the properties with investors absent in most cases",?

“There appears to be increased demand for quality new listings in the former Auckland City. Following some successful auctions and quick sales, there is a feeling that the short supply of quality listings is driving this market positively. This may be causing a localised trend” Ms Whitehead said.

Ms Whitehead said “Demand for property is also apparent in Waitakere, with some strong results in recent weeks.  Agents have reported a steady demand but a shortage of listings in a number of suburbs.  First home buyers appear to be the main group purchasing the properties with investors absent in most cases.”

Bernard being accused of talking up the market .....priceless.

That damned spruiker Hickey. Thousands of gullible fools have probably rushed out and bought dozens of properties each as a direct result of this headline.

Was talking to a Barfoots agent on Aucklands North Shore yesterday and they had a very strong February. March also has started strong. (be interesting to see there stats when they come out) Prices on the larger homes in the 600 to 750,000 bracket have moved up 30 to 50k with no sign of easing off to date.

Auckland may well be facing price increases again. (Sorry to all that descided to wait)

"..Prices on the larger homes in the 600 to 750,000 bracket have moved up 30 to 50k.." If it ain't gonna sell, put the price up! It doesn't matter what the price is, if it doesn't sell? Finance Company failures + Leaky Homes + Earthquakes + Bank Lending tighter + CPI increasing + Rising unemployment = Billions less NZ$ to spend on anything, never mind about historically overpriced property, this year, than last. It's no that 'people have decided to wait';  it's that they just plain can't afford to buy anything!

Question 1. Where is the money coming from? Pay rise? 

Debt. The banks are boasting privately to brokers on how they have relaxed their criteria on 90% and 95% loans.

Sigh...

cheers

Bernard

Tax cuts in the wealthy areas

Yes I am sure it would be in Barfoots best interests to talk down the market

Also I think you might have been misled regarding larger homes, how can you quantify that homes in the 600 - 750k bracket have moved up. Did the agent just suddenly put on 30-50k on existing properties that were for sale? And more importantly did they actually sell.

As another poster has mentioned, most people are not waiting they just cant afford it.

However, the recent interest rates cuts will be bad news for the market as this will just increase people affordibility and in turn increase house prices.

Gavin, The B&T guy must have been the same one who sold the "Auckland Rental Crisis" story to the NZHerald last month.

Try checking the facts. B&T's own figures show that they sold fewer in Feb 11 than in Feb 10.  True, sales did increase by approx 10% between Jan and Feb this year, but the normal seasonal increase is 20-25%.

Oh, and there was this bloke down the pub who told me - God's truth - that he sold his granny's flat in Bexley last Friday for 15% above GV ... and then there was this other bloke on the bus ....

enought anecdotes already!

@Gavin Jones ...... Was talking to a Barfoots agent.......And you believed him???

With 10,000 homes destroyed  by earthquake,  another 100,000 damaged, almost zero building, lower interest rates, the leaky homes disaster, increasing population, and rising petrol prices, all add up to a massive housing shortage leading to rising rents and rising prices in the medium term.

Starting in city centres and spreading like ripples on a pond the recovery has started.

This is panning out exactly as Olly Newland said it would and the unbelievers that have  bogged furiously on this site to the contrary will be left in the dust  with only their rent books
to comfort them.

Housing shortage? Not really. What is 'building up' ( sorry for the pun) though, is a backlog of building. The market will be awash with 'new-builds when, or if, the market shows the slightest sign of bottoming. Mass builders will be everywhere on TV with 'buy off the plan now!' adverts, to get the cashflow  in, to get the thousands of properties built, not to satisfy demand, but to rebuild their stalled revenue.. All trying to 'get to market' before the other guys. There's supply coming, alright! Heaps of it....All trying to 'make up time' for the years of downtime - at the same time.....The last thing anyone wants i to have is a house on the secondary market when the profit-strapped primary builders get up a head of steam!

I'll have to disagree snarlypuss.  I don't think the builders are profit strapped when they're being propped up by the government and purposely delaying supply.

My example is Hobsonville Point (Auckland).

 http://www.hobsonvillepointliving.co.nz/

167 hectares of government land being supplied at inflated values over a 10-15 year timeframe involving at least 4 building companies.  Includes "affordable" (2 bedroom @ $395k) options and government assistance (land purchase is deferred) for the first home buyer (income $100k or less). 

The above development is for 3000 homes in total which is short by 20,000 for the Auckland market according to some reports.  Where is the supply going to be built snarlypuss? 

Perhaps, meh, your '20,000 short' comes from the same report sources as BigDaddy's '10,000 destroyed in Christchurch'. Others reports say > '2,000..." !

http://www.interest.co.nz/news/52592/civil-defence-stumped-prime-ministers-projections-christchurch-housing-stock-damaged-and-destroyed

If dwelling density increases from the current 2.53 odd, to even just 3, there'd be no need for even one more house in Auckland!

Maybe a good point - but you could argue for every devonport house that has had $280k spent, there are 5 south auckland rentals that haven't had a maintence dollar spent on them for 20 years that should have gone down in value. Maybe that balances it out?

Lets stay rational and not get carried away.

Auckland is certainly steady - I'm not arguing its weak - but REMEMBER that Feb is traditionally one of the hottest 2 months of the year for property. The fact that prices have moved up a bit from January is seasonal and doesn't indicate a new headwind for property

Exactly - but the same is true for when prices go down slightly during winter months and everyone says the housing market has collapsed!  Fact is it has been pretty steady for the last year or so.

tick tock tick tock I remember calling it, hope someone listened...

calling what? Auck staying steady and the rest of the country weak?

Matt. Is this trend only for Auckland?  Do you mean there is no this trend in Wellington or other  areas?

I don't know why the bulls are so excited about this release - its still pretty weak

Investors are still staying away, the 95% loans are for first home buyers. First home buyers also more likely to buy the refurbished homes that sell above RV and sneak thru the qv filters, the 10s of thous dumped into them to make them worth more completely hidden from stats.

I know of a group of investors who simply can't get bank funding. I argued that if banks think it's too risky to lend to you given large portfolios that are heavily exposed not only to price falls Interest rates and tax changes but to natural disaters, then you prob shouldn't try push the issue.

Remember banks make money by lending, they want you to borrow as much as you possibly can without missing repayments and defaulting. I would never borrow anything even close to the max banks would lend me. Banks don't mind you losing thousands and thousands so long as you keep up your repayments.

Matt, many people want to buy a house in central Auckland now adays including myself. People do stupid things sometimes.

To be honest, anyone taking on debt in such an uncertain time is stupid, in the next 5 years we do not even know what will happen, and I really think that in 5 years time property prices will not even be near what they are today, I also have a feeling this will be because of a war.

Perhaps Terry Serapisos, or the Dave's Henderson or Mark's Blue Chip investors.... are a better persons to ask about how good debt is :)

So did Graeme Hart; remember? When he bought Burns Philp a few years back...and it very nearly sent him broke. Debt is always taken on at 'the right time'. But I'm glad to see that you agree that 'valuations (can) go down.." I'd suggest that NZ property was at it's highest, ever?, back when interest rates were high, and going higher ( finance cost had to be recouped etc); whereas now, we have talk of "lower the OCR'. So equally that should mean - lower interets rates = lower property prices ( the economy is stuffed, and we need to keep it on life support with lower %)?

The Herald heading is:

Property values resume slide in February

 

It now reads: Small rise in house values halts decline - QV.

LOL!!!!! beautiful - the power of spin!

Bet the Granny Herald's RE advertisers were quick on the phone to get them to retitle!

Damage, Snarlypuss & Mandk: No I was with an active purchaser and his agent that has come up from the South Island. He is wanting to buy a property in that price bracket (600 to 750) and has been working with a good Barfoot agent. The first he missed out on went to multi offer and sold at 40K above the agents expectations. The next sold at auction 100K over both their and the agents expectations and the last again multi offer 50K over expectations. So these are houses that SOLD. Something is happening out there but as stated previously this is on the North Shore of Auckland. My friend has had to lift his own budget by 60K and still cant find a suitable property. He has now started looking at new houses.

No doubt that good properties in central ak and north shore selling well. Question is will the outer suburbs catch on?

"So these are houses that SOLD. Something is happening out there but as stated previously this is on the North Shore of Auckland"

What area of the North Shore is this? Cause areas like Maharangi Bay, Browns Bay are hot in demand based on the footfall

Make no mistake there is a lot of money sitting around at the moment, especially in family trusts.  Some people might be tight for cash but there are those who have plenty.  Some are looking to buy commercial property. Depends on what circles one moves in as to how aware one is of those sitting on sums of money at present.  No decline in private school rolls either (not withstanding events in Chch).

And don't forget the tax cuts - household with 2x100k earners better off by $600/month. I would say most looking to buy in central Auckland are in that category.

not many in that category JimboJones

but sure there will always be enough in that category to keep Central Auckland prices up ,especially as petrol prices skyrocket. I've never opposed the notion that central Auckland prices will hold their value and probably edge upwards 

As for the rest of Auckland -  I wouldn't be so confident. In fact I think suburbs in the north, west, south and east will go backwards as petrol prices soar, immigration drops and the general economic lethargy continues 

hah, we've taken sales fudging to a new level here in OZ.............

http://www.news.com.au/money/auction-rates-fudged-by-failed-campaigns/st...

As usual Olly got it 100% right when he wrote "The Day the Bubble Bursts"  2004-5

He said what should be done in a  stressed market and advised accordingly:

"Good quality middle range homes with three or more bedrooms in leafy suburbs are as bullet proof as you can get. In fact you can't go too far wrong sticking to "popular" homes in mid-price ranges-even in the worst of times"

Trade in your rent books or forever remain content to not even own the letter box .

BigDaddy

So when did the bubble burst?

I wouldn't call the drop in prices we've had a bubble burst

Its been a correction

Some "correction"

Total collapse of finance companies losing billions of Kiwi investors money

Most mortgagee sales in 25 years

Collapse of shoe box apartment industry

Global Financial Crisis

Highest unemployment in 10 years

Building industry at a virtual stand still

Sales volumes moribund

Development projects abandoned

Record company liquidations

Record personal bankruptcies

etc etc

Where have you been in the last 3 years?

On the whacky backy?

Be thankful the recovery has started.

that is not a bubble bursting

that is economic woes on the back of finance company failures - big difference

If you talked with any credibility you would know that when bubbles burst house prices fall on average 20-30%, and return closer to historical median house to median income norms - ala Japan, USA, UK etc  

NZ house prices still remain fundamentally overvalued, the bubble is still inflated 

We'll either have another -10% "mini crash" or more likely prices wll basically go sideways for 3-4 years, so that values in 2014 are no higher than they were in 2007 in norminal terms, and a lot lower in real terms 

so...BigDaddy - what are YOUR predictions for the next 2-3 years...be a man not a vague- talking spruiker, and give us your forecast...then I might offer you some respect 

I don't have a problem with house prices falling but I'm just not sure that they will. Mainly because of all the talk of peak oil, and how food, petrol and COL in general is going way up and will continue doing so. Since it takes energy to build houses, I'm wondering why houses would be immune and not go up in cost just like the rest of it?

Elley

But how are households going to pay more for houses than they do now when petrol and rising food costs are soaring and will start eating further and further into incomes (which are flat?) I think households are already stretched to the limit

Also please factor in that we are near the bottom of the cycle with interest rates - interest rates could well be 1-2% higher in 1 or 2 years. The only reason they won't go up much is if the economy continues to stall, which in itself, even with low interest rates, would keep house prices contained

Yes, I understand that. But it doesn't change the fact that if everything costs more (materials etc) then it's hard to imagine houses costing less. I can't see any building companies willing to consistently build at a loss. People have to put up with higher costs for everything despite not really having more money so why wouldn't they put up with higher housing costs too? It'd involve cutting costs elsewhere, in particular hobbies, toys etc - but it must have happened already because if people aren't currently going bankrupt despite a higher COL and stagnating wages there must have been areas where they were able to cut expenses, and it may still be the case. Not an exciting prospect I suppose but a possibility.

I guess it might become the norm to rent a house for a lifetime and never even consider buying. A bit sad I think but... Or maybe houses will become much smaller than today's average new house so that they remain affordable to a majority of people despite higher building costs?

Matt in Auckland, you say not many people have a remuneration of $100,000 pa. Are you for real, there are heaps of people who earn that coin in Auckland.  So long as they didn't have a head-rush and buy million dollar places, there are a good number of people who have a pretty good income to live off, that's why some yuppies don't even blink with the huge rents for a place they covert, or the price when they buy. NZ is no different to other western countries, there is quite a divide between the haves and the have nots. There's plenty of both.

Muzza

Please read carefully. I said there are very few households (as a proportion of total households) where BOTH heads of household earn more than 100K each

If you want predictions then go direct to the oracle of wisdom:

www.ollynewland.co.nz/

gee thanks, Olly sharing the stage with that other "wise Prophet" Brendon O'Donovan

How many times has he been wrong in the last 2-3 years? Lost count!

I'm sure there will be plenty of fools parting with their money to go to that event - you know the types, the ones that join up to pyramid schemes

Just for a laugh I'm going to track down Olly's bubble bursting book to see what he actually said - no doubt it was full of vague pronouncements, no better than a horoscope, statements so vague that the truth and reality will always align with them 

That's definitely the Olly MO.  Spew out enough vague, incoherent and contradictory ramblings and you're bound to be able to claim a few hits, and it's usually safe to assume that the majority of people will be too lazy to check it out properly.  Kind of like Sensing Murder but more sleazy.

exactly. the guy is a charlatan, but there will always be enough fools to pay to listen to people like that

I find him about as credible as Fatima Mbogo of Liberia, who just emailed me with a proposition to access her dead father's millions of pounds which have been sitting in a bank account in Londen, Endland ever since he was assassinated by political rivals.  It's a very convincing story.

gee thanks, Olly sharing the stage with that other "wise Prophet" Brendon O'Donovan

How many times has he been wrong in the last 2-3 years? Lost count!

I'm sure there will be plenty of fools parting with their money to go to that event - you know the types, the ones that join up to pyramid schemes

Just for a laugh I'm going to track down Olly's bubble bursting book to see what he actually said - so doubt it was full of vague pronouncements, no better than a horoscope, statements so vague that the truth and reality will always align with them 

Would you like to repeat that Matt? Once more would be good

editing / slow computer  problems

Seems I am having as much problem with editing as you are with reading comprehension

You can say that again

And again and again

A Bubble Graph for you Matt in Auckland ( although its from another topic/thread, it's generic). Compare it to the House Price Index in this article, and decide where you think we might be. I don't think we are where BigDaddy thinks we are! My guess is he thinks we're just about to 'return to normal'. It looks nasty from thereon down!

http://macrobusiness.com.au/2011/03/gold-silver-and-oil-ratio/bubble_phases/

It really does seem doubtful that we could ever return to the 3x median income multiple. The cost of developing new sections, the rise in compliance costs, bigger fancier houses since those halycon days. It was great, but so was 35c per gallon petrol, threepenny icecreams and 1/6d for the best seat at the movies. Lots of folk have gambled the family home at the beginning of '07 speculating they would be buying back at 30% less in 2 years. Must feel like a long wait. We had one around here called Nicholas. Seems to have disappeared. Maybe his long suffering better half has finally dragged him off househunting.

Wash your mouth out Vera the 3 x ratio is the gold standard of affordability, show it respect, Hugh P, Wally and Nic A where are you guys? :)

they're out looking to the main chance.  A lack of red tape and subdivisions for all. There's always a silver lining even if other folk are in the shit.

"It really does seem doubtful that we could ever return to the 3x median income multiple"

I agree that it is doubtful now, but only because interest rates are so low.

Matt in Auckland: Ok I am brave enough to give you a prediction. Houses in good suburbs of Auckland will be 25 to 30% higher in three years than they are today.

But are you prepared to put money on it?

I think you must have been talking to yourself when discussing prices with a B&T agent.

Is your prediction in real terms or nominal? Either, you are very brave to suggest 25-30%. I am not sure where all this magical money is going to come from. Care to explain how you came up with this prediction?

 

thanks and I respect your right to an opinion

I think "good suburbs" in Auckland will be no more than 10% higher in 3 years time, and Auckland prices on average will be 5% higher, bringing them back to about where they were in 2007

So we'll agree to disagree

time will tell

Colin: Absolutely and so should you. Property has been very kind to me over the last 45 years. Just buy, watch your borrowings and if possible never sell. Safe rule of thumb, always maintain an equity of at least 50% and get them debt free as soon as you can, then you don't have to worry about the banks or interest rates.

I had a bet with a mate - an ex real estate agent - when he bought a house three years ago. The bet was for $300 and simple: if his next GV went up I lost. If it didn't I won.

He called in about six weeks ago, a migrant en route to Australia. Yes, I had won the bet and by a large margin, but no I didn't collect. Essentially, he couldn't afford it.

Matt in Auck, how do you figure that when the banks wont lend more than people can afford to pay and peoples wages wont increase 5% over 3 years. Or do you think your income is going to increase 5%.

I dare say rent and mortgages are just about a way of life, they both will head up eventually but it will just be that rising rents is a COL that people will need to budget for but low interest rates are going to be around for some time, therefore less houses. add in ChCh and you get the picture. other COL companies will just need to adjust and not push for a while... I'm sure they will be told (with government contributions to re-builds etc on the plate)

yes gavin i agree, property is 'safe as houses' if you do it right...ie dont overleverage. out of the 7 places ive owned in the last 20yrs ive lost a little bit on 1. dems good odds. i intend to be mort free in a new hse wen im 45...i wont do that laying tiles...ill do it thru adding value to houses. the gloomsters here either have too much debt or are'nt on the ladder yet

Look upon the evidence and tremble: 

Rent shock predicted as shortage gets worse
By Anne Gibson
5:30 AM Wednesday Mar 9, 2011

Auckland faces a rent shock as the Christchurch earthquake diaspora, rising insurance premiums and the loss of a landlords' tax break all affect demand on already scarce stock.

link:

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10711046

So putting the OCR down then would be madness. Keep price inflation ( rent is counted in the CPI, not house prices) down by putting up interest rates. Landlords can try to raise thier rents to cover the cost, but they'll find that their tenants don't have the wherwithall to pay. So they'll move. That will leave landlords, who escalate rents, without a tenant - nasty in the face of rising interest rates - and they will have to either lower their tariffs to attract a tenant...or sell up. Throw in a couple of taxation changes in the next budget, like Land Tax and/or Stamp Duty - to raise the money for the Chch rebuild - and it looks like a swag of ex-rental properties are about to swill through the market.

Evidence?? Not exactly a reliable resource

Let’s pretend it was a reliable resource...Did you actually read the article....

“Property management business Crockers released information this week saying rents were not always rising and in some brackets had fallen.

Mr King said: "Despite news footage of Auckland would-be tenants queuing for rental properties, rental prices appear to be holding steady, rather than leaping skywards. In the two-bedroom market, January's average national rent was $348 per week,"

Mr King said rents were still cheap and while inflation rose 4 per cent last year, rents rose only 3 per cent.”

This 'reliable source', Anne Gibson?

"Press Release: Real Estate Institute Of New Zealand

Previous Winners
Best Property Portfolio, Anne Gibson,

Regardless. If Auckland puts up its rents, maybe it's time to move to Aussie, like Christchurch residents?

"Gold Coast property is facing oversupply conditions, with banks and major lenders exposed to falling values, according to an insolvency firm speaking at an Australian Financial Review property conference."

beggars can't be choosers,govt needs to incentivise renters to cheaper areas to get better value for their supplement budget.

bigdaddy is so full of bull -

January immigration figures just in, very very low 

I have been calling this for a while. 2011 immigration is going to be low overall - this will markedly take the heat out of housing demand

No doubt BigDaddy will come up with some bull to argue the other way

But Duke, there's a 3000 new home development happening on the edge of Auckland as we speak.

Hobsonville Point.  New properties are on the market now.

Duke - yes immigration is still positive - the point is it is much lower, therefore demand is much weaker than it has been

You have to remember too that international students are included in the figures, so its likely that there was almost no extra housing demand created by the Jan stats

the value is in existing stock as it is now too expensive to build - hence the shortage, and Soveign Homes being able to go belly up whilst existing stock just creeps higher in price - crazy market that's for sure, wait till it heats up. many hundreds of hits per day on empty unit advertised 2 days ago, old tenants went on to buy a house for $450k in Manukau Heights or somewhere like that after 4 years of renting (and working!!!)

For a few weeks only.Get real.You sound so desparate to find a positive which is understandable as the economy goes backwards and we need emergency interest rates. The number of people currently being laid off throughout NZ is staggering as small businesses fail. Just talk to accountants and people in the know. The drift to Australia for work is accelerating. Houses which would normally be sold but are currently not selling are becoming rentals by default.