The Real Estate Institute of New Zealand (REINZ) and the latest QV index both indicate New Zealand residential property values are trending up and prices in February showed strong gains. Total sales volume was up 37% last month from a year ago, marking the highest peak since 2008, while median prices edged up 1.1% compared to February 2011. The news is favorable, but enthusiasm remains muted due to the marginal price gains with consideration to the large increase in sales. Auckland is seeing the most growth, although most areas in the country experienced a boost since the last data report. For more on this continue reading the following article from Property Wire.
The residential property market in New Zealand saw strong sales in February and prices were continuing to edge up, according to two leading market reports.
The latest data from the Real Estate Institute of New Zealand (REINZ) indicates strong sales growth in the residential housing market, with 6,168 unconditional sales for the month. The volume of sales is up by 37% or 1,666 sales compared with the same time last year, and is the best February result the market has recorded since 2008.
It also shows that the national median house price remained steady for the third straight month at $355,000 and is up 1.4% compared with February 2011.
While the latest QV index shows that values are now up 1.1% over the past three months, 2.9% up over the past year, and are 2.9% below the previous market peak of late 2007.
According to REINZ all regions apart from Otago and Canterbury/Westland recorded double digit growth compared to February last year. Although Canterbury/Westland’s sales volume more than doubled compared to February last year, the market was impacted by the February 22 earthquake and its aftermath.
Otago recorded the highest monthly increase, up 6.3%, followed by Hawkes Bay with 4.6%, and Waikato/Bay of Plenty and Northland, both with 3.3%. Compared to February 2011, Canterbury/Westland also recorded the highest rise in prices, up 14.0%), followed by Waikato/Bay of Plenty at 1.9% and Otago at 1.8%.
‘The real estate market in February has built on the strong results in December and January with a 37% lift in sales across the country compared to February last year and the highest number of transactions in a February month since 2008,’ said REINZ chief executive Helen O’Sullivan.
‘While agents are seeing more activity and more positive sentiment from buyers in most places this is not translating into significant price increases. Agents in a number of areas continue to report listing shortages. Despite the increased number of transactions, buyers are remaining cautious with the days to sell measure down by just one day, and still above the long term average,’ she explained.
‘While most of the focus is on Auckland, as the nation’s largest real estate market, its sales volume change and price movements are very much middle of the pack, with a number of the provincial markets showing stronger year on year sales volume and price growth. The improvement in the Canterbury/Westland market is remarkable especially given the complexity of a sale transaction in a post-quake environment,’ she added.
QV research director, Jonno Ingerson, pointed out that the rises are very modest compared with previous years. For example, from 1993 to 1997 values increased between 8% and 14% per year and in 2002 to 2007 values generally increased by 10% to 15% per year.
‘There has been a noticeable increase in activity in the market over the last month, which is typical for this time of the year. While this level of activity may be higher than the last few years, it is still below long term average. There is still a shortage of properties for sale in some areas, and in general buyers are acting cautiously and carefully,’ Ingerson explained.
The Auckland area remains the fastest growing of the main centres, up 1.7% over the past three months and 4.8% up over the past year. Values are now above the previous market peak by 2.3%. This increase across Auckland is being led by the old Auckland City which has increased in value by 6.5% over the past year and is 5.1% above the 2007 market peak.
‘There appears to be strong demand in the central areas of old Auckland City such as Ponsonby, Grey Lynn and Sandringham. Healthy sales prices are being achieved, with good properties coming to the market. Some buyers are staying cautious and sticking to their upper limit whereas others seem to have few financial constraints and as a result auction prices are setting new levels,’ said QV valuer Glenda Whitehead.
‘Buyers in the North Shore are being driven by location, as opposed to price, with activity patchy. Some suburbs are experiencing good turnover of properties whilst others are quite stagnant. The number of private sales is also noticeable,’ she explained.
‘In the West more renovations are noticeable, with people wanting to upgrade or extend their homes to meet their needs as opposed to incurring buying and selling costs. In comparison, the market in the Manukau area is active around the $500,000 to $800,000 range, even up to $1 million. Houses in the typically desirable areas such as old Howick properties with sea views, and houses in sought after school zones are experiencing good sales,’ she added.
Values in Hamilton remain relatively stable, rising 0.9% over the past year, but are currently 11.1% below the 2007 peak. ‘The number of sales appears to be the highest for five years, with homes in the mid to upper bracket appearing to be selling well especially. This renewed interest however, is not stimulating prices with values remaining consistently static,’ said QV valuer Richard Allen.
Tauranga values have also remained relatively static, up 1% over the past year but remaining 11.3% below the 2007 peak. ‘Many homes, particularly in the better regarded suburbs, are slightly overpriced in this market.
Buyers are still looking to pay a sharp price, which is reflected in the fact that realistically priced well presented homes in the low to mid value range are selling at a good rate,’ explained QV valuer Shayne Donovan-Grammer.
In Wellington values are the same as they were a year ago, having dropped 2% for the first six months, then steadily increasing for the last six months. ‘Across Wellington, prices seem to be firming and more listings are coming to the market. Buyers are still being cautious, especially with the public sector restructuring and its effect on job security in the region,’ said QV valuer Pieter Geill.
Apart from Auckland City values in Christchurch have grown faster over the past year than any of the other main centres, rising 4% and are now level with the 2007 market peak.
Waimakariri District has increased 12% over the past year and Selwyn District 10.8%. Both areas are by far the fastest increasing parts of the country. They are also the highest about the 2007 market peak at 6.5% and 5.9% respectively.
‘Rents continue to rise with high demand placed on rental properties from people whose homes were uninhabitable due to earthquake damage, people who need to relocate whilst they carry out repairs, or from those who are moving to the city to help with the rebuild. This is making property investors look at what potential some properties now have,’ said QV valuer Richard Kolff.
‘Lifestyle properties are also seeing high demand, with agents saying there is an undersupply of properties for sale in the $700,000 to $1 million range,’ he added.
Dunedin values are 2.3% above the same time last year, although the growth of 4% over the past six months is even faster than Auckland City. ‘The lower end of the market is still seeing reasonable demand with purchasers now prepared to take on more risk with lower priced houses. This is in contrast to six months ago when most of the demand was for well presented dwellings with no deferred maintenance issues,’ said QV valuer Tim Gibson.
Values in most of the provincial centres have stayed relatively stable for the past three months, with the exception of Gisborne which is down 3.5% and Wanganui down 2%. Over the past year values are within 2% of last year’s value in all centres apart from Napier which is down 2.2%, Wanganui down 5.2% and Queenstown Lakes down 2.7%.
This article was republished with permission from Property Wire.