By Bernard Hickey
House sales rose to a four year high in Janaury and prices continue to warm up in most big cities as limited supplies of waterproof and undamaged properties in Auckland and Christchurch were snapped up by firm demand from migrants and first home buyers confident about low interest rates for longer.
However, prices and activity were more subdued in provincial areas and remain well below their 2002-2007 boom levels.
Government owned property valuer Quotable Value (QV) released its monthy survey of property value nationwide showing values are have risen 1.1% in the last three months and are up 2.7% from a year ago.
The Quotable Value index, however, remains 3.3%
2.7% below its late 2007 peak and prices are falling again in provincial areas, QV reports.
REINZ reported a flat median sale price in January, but said sales volumes were up 25% from a year ago at four year highs, with a limited supply of listings in Auckland and Christchurch. See more here in Gareth Vaughan's article.
Quotable Value's measure of house values is different from the Real Estate Institute of New Zealand's (REINZ) measure, which is a simple median of house prices transacted in any one month and can be skewed by more activity or bigger price moves in different parts of the market.
The QV measure compares the prices transacted of the same types of houses in the same areas to try to compare apples with apples. REINZ figures for January are due within days and will be closely watched as they are seen as the broadest and most up to date figures, although more volatile. The REINZ figures also show levels of activity in terms of sales.
Auckland's largest real estate agency group, Barfoot and Thompson, reported figures for January showing Auckland Central house prices up 9% from a year ago with sales activity up around 21% from a year ago. See our report on Barfoot and Thompson's figures here.
“While national values are continuing to increase, this is not universal across the country. While the combined main urban areas and combined rural areas have increased over the past few months, the combined provincial areas have begun to slide back again” said QV.co.nz Research Director, Jonno Ingerson.
"There appears to be a little more market activity since the New Year, with signs that decisions made over the holiday break are now being put into action. However potential buyers remain cautious and calculated and are often unwilling to commit quickly," Ingerson said.
“The increase in values in many areas, particularly central Auckland, can in part be attributed to a lack of supply, with a shortage of desirable and well presented properties for sale. When quality properties come up for sale in these areas they are in high demand which is tending to push the price up," he said.
The combination of the Barfoot, REINZ and QV figures paint a picture of a two speed market, with stronger activity and prices in central Auckland and Christchurch, where waterproof and undamaged houses are selling well. Prices on the fringes of the major cities and in provincial areas are more subdued, given supply shortages are less acute and both internal and external migration are reducing demand for property.
(Updated to show the correct reduction in value since the peak in late 2007, of -3.3%.)
Here is more detail below from QV on value trends in various areas:
Values in the Auckland area are increasing the fastest of any of the main centres, up 2.1% over the past three months and up 5.1% over the past year. Values are above the previous market peak by 1.9%.
The old Auckland City continues to be the strongest performing area within Auckland, up 2.7% over the last three months, up 7.2% over the year, and is now 4.4% above the previous market peak. North Shore has shown slightly slower value growth but is still up 4.0% over the year and 0.9% above peak. Across the rest of Auckland values are up over the last year by between 2.5% (in Franklin) to 3.2% (in Waitakere) with the exception of Rodney where values have been volatile over the past few years and now sit 1.6% above last year.
Values in Hamilton have once again stabilised in the past few months in what is probably a long-term trend. This follows a slight short-lived recovery in late 2011. Values are now 0.5% above the same time last year and 11.0% below the 2007 market peak.
In general, Tauranga values have been increasing very gradually over the past year, up 1.1% over that period, but remain 10.9% below the 2007 market peak.
QV Valuer Shayne Donovan-Grammer said “Tauranga has started 2012 well with a good level of activity in the market. This is perhaps even a little more than expected but in line with what has happened this time of year in years gone by. While activity has improved though, prices have remained stagnant”.
Over the past year, values in the Wellington area first fell a few percent, then recovered most of those losses since mid 2011, leaving current values just 0.4% below the same time last year and 6.2% below the 2007 market peak.
“Despite increased market activity, prices are generally quite static throughout Wellington. Properties in the lower price brackets are meeting the greatest demand although it is still important for all sellers to present their properties well and to price them sensibly” said QV Valuer Kerry Buckeridge.
Values continue to increase in Christchurch, as they have been doing since just after the February 2011 earthquake, and are now 3.7% above the same time last year and just 0.7% below the 2007 market peak. The areas immediately surrounding Christchurch have continued to show strong value growth, with Waimakariri District 10.5% up over the year and 5.2% above the 2007 peak, and Selwyn District 8.7% up over the year and 5.3% above the 2007 peak.
QV Valuer Richard Kolff said “areas like the north west of Christchurch continue to benefit from good demand from purchasers. Open homes are busy and resulting in a multiple offer situations for the vendors. This is particularly the case for houses in under $400,000 with demand being fuelled by a steady stream of payouts to red zone home owners”.
In Dunedin values have been increasing since August 2011 and are now 3.4% up over the past twelve months and 4.2% below the 2007 peak.
QV Valuer Tim Gibson said “the Dunedin property market is seeing increased outside investment due to the affordability of Dunedin values. Buyers are becoming more active and we are seeing some multiple offer scenarios occurring. The lower to mid bracket properties are the most popular with increased demand stimulating the growth shown”.
While values for the combined Provincial areas have slid back over the past three months, there is variability between areas. Towards the end of 2011 values appeared to be increasing across most provincial centres in line with the main centres. However in the last few months values have begun to drop again in Whangarei, Rotorua, Gisborne and Wanganui. Values have stayed more or less steady in Napier, New Plymouth and Palmerston North over the past three months, and increased over the same period in Hastings and Nelson. Nelson also differs from all the other provincial centres by being only 0.3% below the previous market peak. This is in contrast to 5.7% below peak in New Plymouth through to 17.0% below in Queenstown Lakes, 17.5% below in Whangarei and 22.3% in Gisborne.
(Updated with regional details, charts)