QV says November nationwide residential property values up 1.7% year-on-year, down 4% from 2007 peak

QV says November nationwide residential property values up 1.7% year-on-year, down 4% from 2007 peak
The value of Auckland houses like these is now above the 2007 peak, according to QV.

Quotable Value (QV) says nationwide residential property values in November were 1.7% higher than a year earlier and 4% below the 2007 market peak, but Auckland prices were up 3.4% year-on-year, and 0.6% from the 2007 peak taking them to their highest level ever.

QV, the state-owned valuer, said the average New Zealand sales price over the last three months was NZ$390,921, down just under NZ$7,000 from NZ$397,805 in the same period of last year.

Jonno Ingerson, research director at QV.co.nz, said national property values have been gradually increasing since April, driven initially by Auckland and Christchurch. However, over the past three months values had started to rise in other main centres, and in many provincial and rural towns.

“In most of the main centres there has been an increase in new listings as sellers who were waiting for the rugby world cup and election to pass are now putting their properties on the market," Ingerson said.

"This potentially gives a greater choice for buyers, however many remain cautious in their decision making and are not rushing to purchase. First home buyers are remaining active and are driving the lower to middle range of the market."

Auckland isthmus prices up the most

In Auckland the biggest value rise stems from the old Auckland City which is up 4.7% annually with an average sales price over the three months to November of NZ$577,774. Auckland City values are 2.5% above the previous market peak.

On Monday Barfoot & Thompson, Auckland's biggest real estate agency, said it sold 894 houses in November, up 23%  from October and up 34% from a year ago. Barfoot said the average price for the month was NZ$567,489, up 2.5% from October and up 2.5% from November 2010.

The Real Estate Institute of New Zealand's November sales figures are due out next week.

QV's Glenda Whitehead said first home buyers were a "sizable proportion" of those active in the Auckland market.

"This is driving demand and value levels in the lower to middle value end of the market," Whitehead said. "Late spring listings have added more option for buyers but this means they need more time to look at the wider range available to them. This trend is evident on the North Shore, where the first home buyers market was buoyant before the election and has since slowed.”

In the south east Whitehead said most entry level priced proprieties had been bought by first home buyers rather than investors.

"In the past couple of weeks, there has also been a noticeable increase in listings which may help the supply and demand levels to balance out, and prices level off."

'Investors coming back' & 'subdivision activity rising'

Meanwhile, demand remained strong for well presented properties in good locations. Furthermore, investors were starting to come back to the market, albeit with very "definite" demands.

"Some are looking to buy, upgrade and on-sell at a healthy profit (the traders), often taking advantage of continued levels of mortgagee sales. Others require a definite positive cash flow return. The latter is often achieved by creating additional revenue from properties such as converting existing garages to sleep-outs or a further self-contained unit” Whitehead said.

“In the West, there has been a noticeable increase in activity in recent weeks. Properties in the NZ$280,000 to NZ$420,000 range are now in demand. There also appears to be an increase in the level of subdivisions activity, with developers seeking titles to individual sites to either sell now or build upon prior to selling.”

The average sales price for the Auckland region in the three months to November was NZ$513,792, she said. Although that's down from NZ$526,659 a year earlier, QV says it's up 3.4% over 12 months based on the QV index.

QV says its Residential Price Index is calculated using sales data from the 3 months leading up to the month being reported. It is therefore not the same as the average sales price, which fluctuates in line with the mix of properties selling in upper or lower price brackets.

Values in Hamilton are 0.3% below last year. In Tauranga they're 0.4% above last year. QV says, however, in both cities there is little sign of real strength in the property market, with both 11% below the market peak.

Meanwhile, values in Wellington are only 0.4% below the same time last year but 6.9% below the previous market peak.

Christchurch value rise continues

Christchurch values continue to rise, driven by demand for non-earthquake damaged houses, especially in the northern and western suburbs. Values are 3.6% above last year and just 1.7% below the 2007 market peak. Surrounding areas have also continued to rise in value with Waimakariri District up 6.9% and Selwyn up 5.3% over the year, with both areas now "well above" the previous market peak.

In Dunedin values are up 2.4% over the past three months, but still 0.2% below the same time last year and 6.1% below the previous peak.

“There looks to be a late spring surge in market activity which is likely to continue up until Christmas, then pick up again in earnest in February," said Ingerson. "The strength of this activity will depend to some extent on how economic events pan out in Europe”.

In the provincial centres he said Whangarei, Gisborne and Nelson have increased in value the most over the past three months.

"With the exception of Wanganui which is 6.3% below last year, most other towns are either close to or only slightly below last year’s value. The exception is Nelson where values are 3.2% above last year."

See QV's full press release here and its residential monthly price index here.

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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mate wait for REINZ - the medians and especially the stratefied median is the only sufficiently accurate and robust number to be relevant.

REINZ should be out next week.

will likely be a high number none the less, unfortunately.

It's forbidden to mention anything related to the figures of 30% and 15%.  Any violation will result in removal of your account.

Compared to inflation of 4.6%, thats a real price decline of 2.8% so everywhere but Auckland city is going backwards.

SK would have been here to comment but was too busy having multiple orgasms.

At least he's getting some..  something you can only dream of :0) 

Perhaps I'm going crazy, but I don't understand?

How does this:

"QV, the state-owned valuer, said the average New Zealand sales price over the last three months was NZ$390,921, down just under NZ$7,000 from NZ$397,805 in the same period of last year."

...reconcile with the statement that:

"property values up 1.7% year-on-year"

Can someone please explain?

"sales price over the last three months", they are comparing sales over the last three months against the same last three months of previous year.  For year-on-year figure, it went up 1.7%.

That's how I interpreted it..

Oh.  So putting it another way:

Average sales from 0-3 months ago is down ($7k) on average sales from 12-15 months ago.  But average sales from 0-12 months ago is 1.7% up on average sales from 12-24 months ago?

Close i think... Average sales from 0-3 months ago is down ($7k) on average sales from 12-15 months ago.

But average sale price in November 2011 is 1.7% up cf. Average sale price in November 2010

Property prices best ever! We're all rich! Lol. Middle class mugs game. You can't EVER lose with property.

Rakon's share price dived to its lowest price, it's not due to property - read the analysis.  Muppet !

Rakon is a dog. Worse than that, its a dog with fleas, word from the wise, if you ever want to get rich, go against the grain, do what people aren't even thinking of doing :)

Most people aren't thinking of buying Rakon shares at their all time low.

 

yep I read the comment as;

Average sale price for Sept-Nov 2011 was $390,921, average sale price for Sept-Nov 2010 was $397,805. 

I think you'll have to take in median sale price as well as average sale to have some meaningful trend.  Average sale price can be skewed if too many high end properties were sold (and vice versa)

 

Nick A et al...can you please explain how, after all your predictions of a collapse, house prices are now HIGHER then ever.

Pity the poor fools who want to buy but have decided to sit on the sidelines because of people on his site.

I believe, Nick A is in Gold Coast, sitting beside the pool drinking XXXX and eating BBQed schreeem.. 

Plenty of cheap properties in Gold Coast, infact there are tons of them... and noone is buying!  NA might also be in the market...

"Pity the poor fools who want to buy but have decided to sit on the sidelines because of people on his site."

If they had bought in Auckland in 2007 - say a $550,000 property with a $100,000 deposit - they would have a capital gain of a massive 550k*0.006 = $3,300 in 4 years

....which is less than they would have earned if they'd put their $100k in a term deposit for 1 year.

Wow, maths is amazing.

Basically there is no more land in the central suburbs, unless you develop parks & reserves.  I have also seen peoples' front garden subdivided for ugly terrace houses - eew!!

Prices won't go down in Herne Bay, Parnell, St Marys Bay, Epsom, Remuera, Mt Eden, Ponsonby, Mission Bay, Grey Lynn, Orakei, St Heliers and Kohi simply because there is no more land.  If you want a bargain, you should start looking at suburbs in the outskirts.

I'm picking the next suburbs out will be the next big winners. Avondale, Roskill, New Windsor, Penrose, Mt Wellington. Basically any street that is within 10km of the city and not full of state housing.

Anyone remember when prices were at their highest in the Celtic Tiger? Was it just before a crash? I mean its not as if they've crashed now, oh wait, we're different.

That's the thing - we have been waiting, and no crash has happened, so I guess we must be different

Ireland economy had been artificially proped up by the EU for years... so in a way, yes we are a bit different !

I concur with both your points haha

Those &*% first home buyers pushing property values up - there should be more taxes on property to stop them. 

hear hear.  First home buyer are nothing but property speculators making tax-free profits.

Please don't give BH ideas

Yes I'm quivering in waves of ecstasy as I digest this information.

The Reserve Bank is warning of a potential fall in house prices as borrowers pile into mortgages.

The Reserve Bank’s weekly measure of new mortgages was above $1 billion – the first time since 2009.

It simultaneously warned of a possible fall in house prices and expressed concerns about households’ ability to cope with mortgage repayments in an economic downturn.

The warning contrasts with many housing commentators highlighting the opposite scenario – that New Zealanders have a dangerous love affair with housing and another boom requires new taxes to dampen enthusiasm.

http://www.nbr.co.nz/article/reserve-bank-warns-mortgage-stress-ch-106091

Govt should do what Singapore govt did.  First home buyer - very few restrictions applied.  Other buyers must follow strict rules; such as minimum 20% deposit, equity on existing home cannot be used, limit on foreign buyers etc.. 

Even that Singapore property went up 18% last year, imagine if they didn't have any restriction!

Until they make other investments safer, mum and dad investors will buy houses. You can't lose with buying houses.

See- Olly Newland was right all along,

Go write that 1000 times until you learn not to criticise the experts .  

 

I wouldn't be so cxcky BigDaddy!  That EU finance deal could blow up anyday and we will all go down the drain... 

Step away from the Olly Shrine.

And for god's sake put on some pants. 

Supply side issues haven't been addressed...that's the issue...the zoning in Auckland has the same approach as a place like Tauranga...it's crazy...but help is on the way:

http://www.aucklandcouncil.govt.nz/SiteCollectionDocuments/aboutcouncil/planspoliciespublications/theaucklandplan/aucklandplanchapter8.pdf

Waffle.  How will they actaully do it? Will someone actually have the balls to alter the table in clause 7.7.2.1 ?

I agree.  Pure BS in my opinion.

Note the expected 700,000 to 1,000,000 increase in population yet only aiming to increase central city residents by 50,000 odd.  Where do the rest live if the urban limits aren't increased?

The only way to fit more medium to high density within the limits is to demolish existing properties.  What happens when nobody demands these properties though?

I here in Adelaide you have new subdivisions where lot sizes can go down to 300 sqm, and site coverage 50%. This helps big time because it allows a 150 sq m house to be built as single storey. Even if you could go to 300 sqm in nz, you would be caught by 35% site coverage which means you need to go to double storey. The result is you can buy new houses in new subdivisions about 30 mins from cbd here for circa 350k

OMG 300 sqm is unheard of...we have 650 sqm land and it is still considered small in Remuera.  150 sqm floor area is just a joke while average should be around 250 sqm!

650sqm land considered small and floor area should be around 250sqm. 

Why is that?  Is it the Jones' that expect you to meet these measurements?

Of course, it is just wrong to live in a tiny house and limited land area where there's no lawn for kids to run around, especially in the Jones' suburbs =)

The issue is that some people think you should have the choice between a 650sqm site with 250sqm house OR 300sqm site with 150sqm house and a much smaller mortgage whereas Auckland Council think they should make this choice for you -  they chose the former and enforce it through District Plan.

150 sq m is not a joke, it's more than large enough for most families. Its nearly double the size of the old state houses.

I'd much prefer to build a small high-quality cottage and maximise the garden space, if any damn council would approve it.  Less jerry-built wasted space to clean, paint and fill with tacky furniture, more room for fruit trees and fishponds.  But of course the McMansion fetishists have a screwed-up idea that value equates only with floor space.  Morons.

MIA: "double the size of the old state houses"

Correct. Considering the space devoted to housing on this site it's surprising how long it takes for some relativity to emerge. Yes, they weren't large. Then in the 60's and 70's Reidbuilt Group Homes and Neil Group homes arrived, were between 1000-1200 sq/ft or 100 - 130 sqm. 3 Bedrooms. Catered to society's needs. No Mcmansions then. 

http://www.trademe.co.nz/property/residential/sections-for-sale/auction-428520909.htm 12 million asking price provides 85 sections at 141k (roads and infrustructure not counted) So how much does a completed house of 150 sqm cost? 

And why does demand push the prices to this? http://www.trademe.co.nz/property/residential/for-sale/auction-408092823.htm

 

Firstly 25ha divided by 85 gives 300sqm lots - but how do you get to them?  You need Council complying 20m road reserves etc so you will lose at least 25% to be vested in council for new roads/berms etc.

So actually it's more like 62 x 300sqm lots with raw land cost then $193K, development contributions 20K, cost of 1/62 share of the new roads/sewage/water/gas/power/phone reticulation through subdivision and bulk earthworks 30k, cost to construct house (including footings and drives/siteworks/required landscaping 136sqm x $1600 = 217K, council and professional fees (RC, BC, subdiv, surveyor, engineering civil, cheap designer) $20k, funding for all above over 2 years $30k = $510,000

Oh don't forget that the developer must prove to the funder that a profit will be made in order to get the funding to develop and the bank will require this to be from 20% (i.e. 80% equity - they won't lend 90% on something as risky as property development).

So total sale price will need to be $612,000 before that land is worth risking developing at $12M land cost.  As usual house construction cost will only be 1/3 of total cost to develop.

This is being spun as demand (population growth ) and supply restrictions (MUL). It is taken as a given that Aucklands population will increase by 1 million and anyone who questions why is a xenophobe, racist or economically illiterate. People are an asset, never competitors in a negative sence.

 

Interesting that 60% of job growth was associated with the property boom.

 

A German told me that in Germany they have strict zoning and only the councils can develop  land. It sounds like a good idea to me.

A German told me (15 years ago) that you needed to be a millionaire to be able to live in a freestanding house.

Note - a freestanding house in a posh suburb that is :)

No - it was any freestanding house in West Germany (East was cheap - you just had to be in some political party)

Now REINZ figures say rising prices. What's going on interest.co.nz gloomsters?

A suckers rally? And I'm not a RE gloomster, but for the first time in a long time, I'm feeling very cautious about the near-term to mid-term future for house prices in NZ. If things turn to sh*t internationally, and there is a 50:50 chance that they will, there is nothing in the cupboard left that the Govt or the Reserve Bank can do to support our economy. We are out of ammo, the cupboard is bare, we have shot our bolt. That’s it! New Zealand in my view faces an unprecedented period of economic vulnerability, and sadly it’s not of her making. And what does that mean for our overpriced house prices if our economy tanks? House prices will tank too.

"New Zealand in my view faces an unprecedented period of economic vulnerability, and sadly it’s not of her making. And what does that mean for our overpriced house prices if our economy tanks? House prices will tank too."

Does not compute.

Low interest rates don't give a Keynesian kick-start of the economy, they only seem to support house prices these days. Interest rates less than inflation, money printing and bear markets penalise savers so much that I'm almost thinking of buying instead of renting. But racking up lots of debt in this volatile economy is pretty risky. It's the paradox of thrift and I don't think this will end well.