Hat trick for property values

Property values have increased for the third month in a row, according to property valuer QV.

QV’s national residential property indices for July show values are now 5.0 per cent below the same time last year, an improvement on the -7.1 per cent reported last month.

Based on the QV index, nationwide values have increased 0.7 per cent over the past month and are up 1.3 per cent from their low in April. With this recent increase in values, the negative annual change is due to the decline in house prices throughout 2008.

The national average sale price also increased further to $382,758 in July from $378,535 in June.

The volume of sales is above the historically low levels experienced last winter, although they are still less than the long-term average. This increased number of sales continues to be driven by the affordable end of the market as more investors and first home buyers return to the market.

QV Valuation Manager Glenda Whitehead commented that sales activity remains at solid levels, particularly given the time of year.

“There are also signs that more vendors are putting their properties on the market,” Ms Whitehead said.

“This is perhaps in response to reports of shortages of listings, signs that values have
stopped declining, and increased buyer optimism and activity.

Although activity has increased at the lower end of the market, values are increasing more in the middle value range of the market. In some areas there is a shortage of quality properties for sale, resulting in increased competition amongst motivated buyers.

“This may be driving a short term increase in sales prices” said Ms Whitehead.

“The market seems to have returned to some form of normality.

“Buyers are making rational, carefully considered decisions based more on fact than emotion.

“Obtaining finance continues to be crucial to many deals moving forward, with banks continuing to screen borrowers and property details carefully,” she said.

While values have increased marginally over the past quarter, it is unlikely that this marks the beginning of another boom. Low interest rates and a shortage of quality houses for sale in some areas may keep the market active. Rising unemployment could drive the market down again.

These factors are finely balanced, and to what extent the coming spring shows an increase in market activity will determine whether prices continue to rise modestly.

All the main centres are now showing property value growth over the last quarter. This has led to further improvement in the annual change in all areas. Across the Auckland area values are now down 3.5 per cent on the same period last year, up from the -5.9 per cent reported last month. Hamilton has improved further to be at -2.9 per cent, Tauranga is now at -6.6 per cent, the Wellington area -4.0 per cent, Christchurch -5.5 per cent and Dunedin -1.4 per cent.

All of the provincial centres are now showing less annual decline than was reported last month.

Whangarei now has values down 9.4 per cent on last year, Gisborne is at -10.5 per cent, Rotorua -8.0 per cent, New Plymouth -1.4 per cent, Wanganui -5.4 per cent, Palmerston North  4.7 per cent, Queenstown Lakes to -5.7 per cent and Invercargill -6.6 per cent.