QV reports NZ house values up 4.6% in last year; Auckland values up 6.3% to fresh record highs; Christchurch values up 5.8% to record highs. Your experience?

By Bernard Hickey

House price inflation picked up in July as record low interest rates combined with housing shortages in Christchurch and Auckland to boost prices in those cities by 6% to 9% from a year ago. Prices in some parts of Auckland and Christchurch are rising at an annual rate of 10-15%.

Figures from Quotable Value (QV) showed national house values were 4.6% higher in the three months to July than a year ago, thanks largely to surges to record highs in Christchurch and Auckland where supply shocks in the form of earthquakes and leaky buildings respectively have hit the markets.

The Real Estate Institute of New Zealand (REINZ) reported sales volumes of 5,097 in July, up 19.9% from a year ago, but down from 10,150 in July 2003 when the housing boom was just getting going.

“Buyer interest in Auckland and Christchurch remains the engine of the New Zealand residential real estate market with Auckland maintaining its record median price of NZ$500,000 for the third month in a row and Christchurch hitting its record median price of NZ$335,000 for the third time since November,” said REINZ Chief Executive Helen O’Sullivan.  “In the Auckland real estate market it seems that winter has been cancelled with strong demand right across the city, although the inability of the median price to ‘push on’ indicates that buyers are still cautious about price."

“We are still seeing recovery rather than boom conditions  when we compare the number of transactions in July 2012 with earlier years such as July 2003 when over 10,000 transactions were recorded.  Buyer caution is also evident in the easing of the national median price this month and the slightly slower pace of transactions in July compared with June.” 

QV and REINZ reported Auckland house prices and values were rising at annual rates of 6.3% and 9.3% respectively in July. They said national prices and values rose 4.6% in July from a year ago.

“The relatively strong increase in nationwide values can be attributed primarily to an increase in the main centres, particularly Auckland and Christchurch. There are initial hints in this latest data that values may be levelling in Tauranga and Dunedin after increasing for the past few months, while values in Wellington remain flat,” said Jonno Ingerson, QV.co.nz Research Director.

Here is the full release from QV attached here:

“Across most of the main centres listings remain relatively tight leading to less choice for buyers. In Auckland this has led to a sellers’ market with prices pushing upwards, while Wellington is showing the first signs of heading that way too,” Ingerson said.

“First home buyers are also active, spurred by low mortgage interest rates. This is starting to encourage property investors and small developers back into the market, although investors are now careful to ensure their purchases return a decent yield rather than relying on capital gain. There has also been an increase in activity in the middle to upper range of the market which can possibly be attributed to people coming back into the market after having held off for several years,” he said.

Old Auckland city strong

QV said values in the wider Auckland area are up 6.3% over the past year, with the pace of the increase picking up since April. In the last three months values have increased 3.1%, it said. "Values have increased the most in old Auckland city, up 7.1% over the past year, and up 3.2% over the past three months. North Shore, Waitakere and Manukau aren’t far behind rising 6.2%, 5.9% and 6.0% over the past year respectively."

Figures from Barfoot and Thompson for July showed prices in central Auckland suburbs, Eastern Suburbs and South Auckland rose in July between 17.5% and 26% from a year ago.

"In the past three months North Shore values have increased by 3.5%, while Waitakere and Manukau are both up 2.8% in that time. Values in the wider Auckland area are now 5.6% above the 2007 market peak, with the old Auckland City leading the way at 8.4% above. When inflation is taken into account old Auckland city values remain 5.2% below the peak although at the current rate of increase will soon be above the previous peak in inflation adjusted terms also."

QV Valuer Jan O’Donohue said Auckland continued to be a sellers’ market with limited listings in most areas. The market has changed in the North Shore over the past couple of months with buyers now acting with more confidence and a sense of almost certainty that the market was heading upwards, she said.

"This is leading to increased competition and prices are edging up accordingly. Prices are also rising south of the Harbour Bridge with Avondale, Blockhouse Bay, Mt Roskill, Pakuranga and Howick popular. Many vendors are also opting to sell by auction, with the auction dates being brought forward when interest is high," she said.

“Property investors and small developers are coming back into the market to the point whereby first home buyers are struggling to match them and second home buyers with equity. More investors are continuing to add to their portfolio in the west, where values continue to be steady.”

Waimakariri, Selwyn up 13-14%

QV said values in Christchurch have risen 5.8% over the past year and 2.1% over the past three months to now sit 1.9% above the previous market peak of late 2007. The Waimakariri and Selwyn Districts continue to increase in value faster than anywhere else in the country, with both now well above the previous market peak. Waimakariri is up 13.9% over the past year and 13.0% above the 2007 peak, while Selwyn is up 13.0% over the past year and is 12.9% above peak. QV Valuer Daryl Taggart said “having come a long way over the past year, Christchurch experienced another vibrant month in July.

QV said values in most of the provincial centres have been relatively stable for the past year, with values lying within a 1.5% band. The exceptions are Napier (down 1.7%), Palmerston North (up 2.2%) and Nelson (up 1.9%) although all three have flattened in recent months. Gisborne has dropped 4.2% over the past year and is now more than 25% below peak.

REINZ said the national median house price fell by NZ$11,000 to NZ$361,000, after reaching a new record high of NZ$372,000 in June. It was up 4.6% from July last year. The Auckland median was a record high NZ$500,000 record median for the third month in a row. 

It said almost all regions recorded increases in sales volume compared to July last year, with Taranaki recording an increase of 62.7%, followed by Auckland with 28.2% and Manawatu/Wanganui with 23.6%.  Only Southland recorded a fall in sales volume (-5.0%) compared to July last year. 

The REINZ Stratified House Price Index, which adjusts for some of the variations in mix that can impact on the median price, is 5.2% higher than July 2011 and is now just below the record high set in June.  The House Price Indices for Auckland and Christchurch have set new record highs in July. Compared to July 2011 the REINZ Housing Price Index rose 5.2%, Auckland rose 9.3% and Christchurch 6.6%.

Across New Zealand the total value of residential sales, including sections was NZ$2.62 billion in July, compared to NZ$2.81 billion in June, and NZ$2.08 billion in July 2011.  For the 12 months ended July 2012 the total value of residential sales was NZ$30.64 billion.

The REINZ Housing Price Index eased 0.7% in July compared with June to sit at 3,377.1.  The REINZ Housing Price Index also once again recorded new record highs in Auckland and Christchurch.  Other North Island and Sections were the only two to record falls in July. 

See the full REINZ market statistics here.

(Updated with REINZ detail, comments, video)