Tauranga Property Investors' Association
The beginning of 2009 has seen house prices drop throughout the country, according to the latest QV Valuation statistics.
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Property values in the Auckland region declined by 9.0% over the past year (calculated over the three months ending January 2009 in comparison to the same period last year), deteriorating further from the 8.0% decline reported in December 2008. The average sale price for the region increased slightly from $489,737 to $496,618.
Glenda Whitehead of QV Valuations said; “Property values continue to ease in stark comparison to levels this time last year. Some are feeling that values are now stabilising, but each area and type of property is affected differently. Generally speaking, values are definitely well down, presenting good buying opportunities. However, our current property valuation work indicates more people are re-financing their present positions, rather than moving property”.
“In the typical investor suburbs such as Otara, Manurewa, Papatoetoe and Mangere, property values have declined to levels where $220,000 will buy a well presented three bedroom home with garaging. Mortgagee sales have driven the low values in these areas. Buyers are bargain-hunting and unwilling to pay full price in these areas, as many believe there is no need to,” Whitehead said.
“Activity during this December and January season has been light as it typically is at this time of year. Although uncertainty remains in the property market, much of the focus has shifted to other demand-determining factors, like job security. Reduced interest rates are certainly a talking point, but we are yet to see increased buying activity as a result,” Whitehead said.
Property values in Hamilton declined by 10.0% over the past year, deteriorating further from the 9.3% decline reported in December 2008. The average sale price for the city increased slightly to $342,347.
“The brief optimism for a leveling in property values which was experienced towards the end of 2008 has not continued into the early stages of 2009. All areas of Hamilton city have had larger declines in January, with the exception of the Central City/North West. However, this area has been declining in value by 2-3% more than other parts of the city since October 2008, reflecting an over supply of stock in this area of the market,” Chris Coakley of QV Valuations said.
“Rapidly decreasing interest rates are taking pressure off those existing home owners with floating mortgages, and those coming off fixed term mortgages. However, buyers have more pressing concerns over job security and the economy in general; in the medium to short term lower interest rates are not likely to revive the housing market. Locally, the forecasted decrease for the milk-solids payout from Fonterra is likely to add to the downward pressure on values. Many Waikato towns and businesses are experiencing the effect of less spending in the local economy” he said.
Property values in Tauranga declined by 9.0%, holding steady on the 9.0% decline reported in December 2008. The average sale price increased from $429,370 to $437,612.
“While values continue to ease there appears to be a little more activity taking place at present. Some well-positioned investors are starting to show interest in the property sector again, in comparison to 2008 when they were decidedly disinterested. It is possible that this attention is derived from lowering interest rates and the poor returns achieved from keeping money in the bank,” said Shayne Donovan-Grammer.
“While more people are looking at the houses available for sale, this hasn’t necessary converted through to sales yet, as there is a belief that both interest rates and house prices will decline further. Under the current economic climate properties that have a good yield are the most saleable,” he said.
Property values in the Wellington region decreased by 8.5% over the past year, deteriorating further from the 6.9% decline reported in December 2008. The average sale price for the region increased from $415,811 to $431,088.
“The levelling-off in the rate of decline of Wellington property values in late 2008 has proven to be temporary. At this stage it appears as though the steady decline of interest rates has done little to build a solid grounding for any sort of property market recovery in Wellington,” Pieter Geill said.
“The continued limited volume of property sales seems due to a lack of buyers, rather than a lack of vendors. The positive effects of declining interest rates have been hindered by tightened bank lending requirements, which reflect the caution of the financial institutions. This makes it tough for anyone trying to enter the property market,” Geill said.
“There are good opportunities in the current market for those who can afford it, as vendors are motivated and interest rates are at low levels. Investors are also returning to the fundamentals of cash-flow, rather than capital gains,” he said.
Property values in Christchurch decreased by 8.8%, deteriorating further from the 8.0% annual decline reported in December 2008. The average sale price for the city decreased slightly from $348,953 to $347,157.
“The change in property values experienced between October and December 2008 showed that the rapid decline could be easing, but these latest figures show that the situation is still worsening. Average sales prices continue to decline; this could be influenced by low sales volumes and the mix of property being sold,” Melanie Holcroft said.
“There have been anecdotal signs of an increase in investor activity, driven by decreasing property prices and lower mortgage interest rates. In short, if consumers have the equity or available funding it appears to be a good time to buy residential investment property,” she said.
“Overall the market has continued to soften, but at a slowing rate on those levels experienced in mid 2008. Lower interest rates have been slow to stimulate market activity, a pattern usually observed. This is attributable to a decrease in confidence in the employment market and rising food and fuel prices. We expect this pattern to continue for the next quarter,” Holcroft said.
Dunedin’s residential property values decreased by 8.3% over the past year, deteriorating slightly from the 7.7% decline reported in December 2008. The average sale price in Dunedin remained relatively steady at $254,088.
“The Southern City area continues the trend of the previous three months, showing the greatest rate of decline (-12.5%). This is in contrast to the Peninsula/Coastal area and Central/Northern City, which are showing a decline of 5.5% year on year. Agents are reporting increased interest from prospective purchasers, especially in the higher price brackets. There are reports that some vendors have pulled their property from the market, in the hope that the reduced interest rates will result in an increase in demand, and eventually prices,” David Paterson said.
“The first home buyers market and investment market is still very sluggish with buyers continuing to take a wait-and-see approach in the hope the market will fall further. There is concern about long-term job security in the current economic climate, and this is also impacting on buying decisions. A continued ease in values, plus the expected further reductions in interest rates, should improve housing affordability. This will also make it easier for first home buyers to enter into the market, providing they have the funds available to meet the banks lending criteria,” Paterson said.
Source: http://www.landlords.co.nz/read-article.php?article_id=3396comments powered by Disqus