Property values steadily increase then level out
Property values have levelled out in most parts of the country in the past few months, and the national average is up from last year, the latest QV index shows.
Results from the QV residential property indices released yesterday show the national average value has risen to $416,074 - up from $409,807 in January last year. The results show property values across the country steadily increased over the period. But that was masking what has happened in the past few months, says QV valuations manager Glenda Whitehead.
Growth in urban and provincial areas had slowed, although the trend was more pronounced in urban areas. Houses in rural areas had decreasing only slightly in the past month.
"The market remains patchy and buyers cautious," she said.
"There is activity at the lower end of the market, driven mostly by first-home buyers.
"Fewer investors are actively buying and some are selling their investment properties now rather than waiting for the changes in property tax to be announced in the May Budget."
In Auckland, the annual growth in property values stood at 8.7 per cent last month - an improvement over the same time last year, when annual growth was 7.3 per cent. The latest results show the average Auckland sale price is $548,948.
Property values in Wellington show a 6.7 per cent growth last month, up from 5.7 per cent last January. The average sale price in Wellington was $468,698.
Other main urban areas had a 7.3 per cent growth - up from the previous year's 6.32 per cent - with an average sale price of $456,535.
Results show property values in other areas, including Gisborne, Napier, Palmerston North, Nelson and Rotorua, were varied but on the whole still higher than they were the same time last year.
Ms Whitehead said that sales activity had picked up last month. A significant increase in new properties being put on the market was expected to result in a higher sales number in the next few months.
Uncertainty after last year's economic recession was still having effects on what and when people were choosing to buy, but that uncertainty was expected to phase out.
"We expect values to stabilise, reflecting the ongoing uncertainty around economic factors such as employment, pending interest rate rises and continued tight lending criteria," Ms Whitehead said.
"We may see more certainty in the market after the May Budget announcement, when personal tax cuts are known, changes to property taxation are specified and interest rate changes are clearer."
Property prices
Average sale price January 2010
* Auckland: $548,948
* Wellington: $468,698
* Christchurch: $380,925
* Hamilton: $361,394
Source: nzherald.co.nz - 8th March, 2010
Residential sales fall due to uncertainty but house values still holding up
Total residential dwelling sales dropped last month to their lowest level in nearly two decades, as seen in figures released today by the Real Estate Institute of New Zealand (REINZ).
Real Estate Institute of New Zealand President Peter McDonald says the total figure of 3,666 dwellings sold in January this year was the lowest monthly total since electronic records began in 1992 and was only the second time the total figure had dipped under 4,000.
“Activity in the residential property market was quiet last month on the back of uncertainty over what actions the Government intended to take on the recently announced tax working group recommendations,” he says.
“Hopefully the market will start to pick up now things are a bit clearer after the Prime Minister gave his opening speech to Parliament on Tuesday. He indicated the Government has ruled out proposals to introduce a land tax, comprehensive capital gains tax or new tax on residential investment properties.”
The total value of residential sales, including sections, in New Zealand in January was $1.53 billion. January’s total of 3,666 was 40 fewer dwellings than were sold in January 2009, the first time total dwelling sales fell below 4,000 and 1291 down on December 2009. The breakdown of the values of the properties was 87 for $1 million plus, 395 for $600,000 - $999,999,937 for $400,000 - $599,999 and 2247 under $400,000.
The median residential house price rose in 11 out of 12 districts last month (January 2010) compared to the same period the previous year. The national median of $350,000 was up 7.7 percent on the corresponding figure of $325,000 for January 2009, but was $10,000 down on the median price for December 2009.
“House values seem to be holding nicely at the moment though and it’s becoming a more settled market as times goes by,” Mr McDonald says.
The largest gains were Otago, up 17.9 percent to $247,500, followed by Taranaki up 12.5 percent to $300,000 and Canterbury/Westland, also up 12.1 percent to $319,500. Central Otago/Lakes was the only region to experience a drop in median prices, down 10.4 percent to $410,000.
Auckland residential sales, including sections, accounted for $666 million of total sales in January. Canterbury/Westland and Waikato/Bay of Plenty were the next greatest value at $191m and $183m respectively with Wellington not far behind at $172m.
The national median for days to sell in January was 43, 16 fewer days than the corresponding period a year ago but 10 more days than in December 2009. Sales were quickest in Southland at 33 median days and in Auckland where the median days to sell was 36.
Source: Real Estate Institute of New Zealand - 12 February 2010
OCR holds, mid-year rate hike still likely
Reserve Bank Governor Alan Bollard kept the official cash rate at a record-low 2.5% as expected, and said the gradual recovery in the economy was in line with expectations and gave him breathing space to stick to his timeline of a mid-year rate hike.
"If the economy continues to recover in line with our December projections, we would expect to begin removing policy stimulus around the middle of 2010," Bollard said today.
The central bank is picking the economy to grow 3.1% this calendar year, according to its December forecast, after it came out of its worst recession since 1991 last year.
Echoing his serve to policy makers over government spending in December, Bollard said "fiscal consolidation would help reduce the work that monetary policy might otherwise need to do" as growth begins to sustain itself.
Annual inflation is in the "centre of the target band" of between 1% and 2% and "expected to track comfortably within the band over the medium term," Bollard said.
Last week, data showed consumer prices fell in the fourth quarter of 2009, in line with central bank forecasts. That gave Bollard room to hold off from hiking rates too early, according to debt collection agency Dun & Bradstreet, in its 2010 Economic Outlook. The annual Consumer Price Index is forecast to track below 2% this year, dropping to 0.9%, below the target band, in the September quarter, according to the RBNZ's December forecast.
ANZ National Bank economists said "it will not be a close call today for the RBNZ," in their morning report, released before the announcement. "No change to either the cash rate or the underlying tone of the statement released is likely."
The kiwi dollar traded at 70.44 U.S. cents, from 70.54 cents immediately before the statement was released. Traders expect the central bank will lift interest rates by 172 basis points over the coming 12 months, according to the Overnight Index Swap curve. That's down from 200 points before the CPI data was released. Australia's CPI rose 0.5% over the same period, and analysts predict the Reserve Bank of Australia will hike its benchmark interest rate for the fourth time in a row as soon as next week.
Bollard brought forward his timing on rate hikes last month, saying he may move "around the middle of 2010," as opposed to his previous indication that any increase would be in the second half of the year.
The change in stance was "encouraging" for ratings agency Moody's Investors Service, which yesterday noted improving economic conditions in New Zealand as one of the reasons why it raised its outlook on the country's banking sector to ‘stable' from ‘negative.'
Economic growth in China, Australia and emerging Asian nations underpinned gains in New Zealand's commodity prices, though Bollard said sustained growth wasn't assured with "overall activity still reliant on policy support" amid ongoing problems in financial sectors.
A muted holiday shopping period will also give the central bank heart that the economy is far from overheating, with electronic card spending flat in December, and credit card billings fell 0.2% from November.
"Policy stimulus and improving export earnings have seen a pick-up in household spending," he said. "That said, households remain cautious, with credit growth subdued."The residential property market, which was a source of wealth during the housing boom, has posted weak sales volumes while prices have risen.
The median sales prices rose 1.4% to $340,000, even as sales fell to a "concerning" level below 5,000, according to Real Estate Institute data. Still, consumers have begun this year with a spring in their step.
The ANZ Roy Morgan Consumer Confidence survey showed more optimism about the current state of economy. A net 22% of the 2,049 respondents said now was a good time to buy major household items, compared to a net 11% a month earlier.
In the U.S., the Federal Open Market Committee kept its benchmark interest rate at an extraordinarily low level of between zero and 2.5%. It reiterated that interest rates will remain subdued for an extended period.
Source: goodreturns.co.nz - 28th Jan 2010
Risk of DIY home sale
The dangers of selling your house privately have been exposed, after a woman who tried to back out of such a sale was ordered by the courts to honour the deal.
Auckland woman Catherine Burton, aged in her 80s, sold her house privately for less than two-thirds of its market value and later, regretting the move, refused to settle.
The new owner took Burton to court and won, and now Burton must also pay high court costs of the dispute, which could total tens of thousands of dollars.
Experts say the case shows those trying to save money by selling their house without a solicitor or an agent take a big risk.
The buyer, Edward Sayers, a lawn-mowing contractor in his late 60s, offered to buy the unit in Ellerslie, Auckland, from Burton in 2006 after she inherited it from her brother.
Sayers sent Burton a letter offering $125,000 for the property, which both parties thought was probably worth around $155,000, based on the previous year's council rating valuation. In a reply letter Burton also said she doubted the property would be worth more than $125,000 due to its condition, but indicated that there was other interest in the property. Neither party ordered an independent valuation.
Six weeks later Burton accepted Sayers' offer of $125,000 and five days later they signed a sale and purchase agreement. Burton, the court found, did not consult a lawyer on the agreement, because she wanted to save money. Sayers had suggested she get legal advice.
When the other interested buyer came back to Burton more than a month later, he was upset to learn it had been sold. The man phoned Sayers accusing him of taking advantage of Burton, and told her to seek legal advice.
Based on this, Burton then refused to settle the agreement, claiming it was an unfair bargain. Sayers – and a nephew who had helped him with the deposit – took court action.
Justice Geoffrey Venning ruled that although the actual value of the property was closer to $190,000, and the purchase was "a bargain", Burton had not been deliberately taken advantage of.
Sayers himself did not know the true value of the property and had advised Burton that she should take legal advice, Venning said.
"This is not a case of experienced or successful business people taking advantage of an elderly lady," he said.
When contacted by the Sunday Star-Times, Burton said she was unhappy with the outcome but did not wish to comment further.
Her lawyer Kevin McDonald said an appeal was possible.
Sayers, who is now 70, was pleased with the judge's decision but was unhappy the issue had dragged out over three-and-a-half years. He still does not have access to the property, and is anxious to start cleaning it up and making it liveable. He believed his offer was fair and reflected what he thought the property was worth. Legal fees to fight the case had been "horrendous".
"The vendor will get very little money from this venture, which is a shame and completely avoidable," he said.
Auckland University associate law professor David Grinlinton said for a contract to be overturned there had to be strong evidence of "unconscionable behaviour", where one stronger party knowingly took advantage of a weaker party's disabilities.
He urged buyers and sellers to get legal advice because property sales were complicated, and the transaction often involved large amounts of money.
Peter McDonald, president of the Real Estate Institute of New Zealand, said the case was a prime example of why people were better off using an agent to sell their property. He said the new Real Estate Agents Act, which came into effect last year, gave buyers and sellers "huge consumer and legal protection".
Agents were required to provide sellers with evidence of how they have reached a suitable price at which to market the property, and were also compelled to advise both parties to engage a lawyer when signing.
"People think they can save money, but they're not," said McDonald.
"I do feel sorry for the woman. I wouldn't want my mother in that position."
Source: www.stuff.co.nz - 17 Jan 2010
House prices up around the country
Figures released today by the Real Estate Institute of New Zealand (REINZ) revealed the median residential house price rose in 11 out of 12 districts last month (December 2009) compared to the same period the previous year.
The national median of $360,000 was up 9.6 percent on the corresponding figure of $328,500 recorded for December 2008. It was also up $5,000 on the median price for November 2009. The largest gains were Nelson/Marlborough, up 14.5 percent to $343,500, followed by Southland up 10.8 percent to $184,000 and Hawke’s Bay, also up 9.4 percent to $290,000. Northland was the only district to experience a drop in median prices, down just over 2 percent to $306,000.
Real Estate Institute of New Zealand President Peter McDonald says it’s an appreciating market fuelled by a shortage of properties for sale but is looking optimistic for 2010.
“House prices have definitely stabilised and appear to be slightly gaining, which is a positive sign. The median house price for December 2009 was up 1.4 per cent on the previous month so, while the median price for December 2009 was a record high for that time of the year, it’s a case of steady as it goes,” he says.
“It is concerning there was less than 5,000 residential properties sold in December but the sale time of 33 days is one of the shortest for the year, which goes to show those properties sold were well sought after,” Mr McDonald says.
The total value of house sales in New Zealand in December was $2.15 billion, which came from the sale of 4,957 houses. There were also 655 more houses sold around the country than in December 2008 but still down 640 on December 2007. The breakdown of the values of the properties was 165 for $1 million plus, 617 for $600,000 - $999,999 and 1,289 for $400,000 - $599,999 and 2,886 under $400,000.
Auckland sales accounted for $918 million of total sales in December. Canterbury/Westland and Waikato/Bay of Plenty were the next greatest value at $283m and $272m respectively with Wellington not far behind at $253m.
The national median for days to sell in December was 33, 12 fewer days than the corresponding period a year ago. Sales were quickest in Wellington at 28 median days and in Canterbury/Westland and Otago, where the median days to sell was just 29.
Source: Real Estate Institute of New Zealand - 18 Jan 200
House prices end year only 4.9pc off late-2007 peak
Property values in Auckland rose more than twice the national average, and QV says signs of confidence are returning to provincial markets. Nationwide house values ended 2009 just 4.9 per cent below the late-2007 peak, having been as much as 9.6 per cent below the peak last April, QV's residential index for December shows.
While the recovery was led by the urban centres, QV is now seeing signs of confidence returning to provincial markets. For the whole of 2009, New Zealand house values rose 2.8 per cent, with an average sale price of $404,671 in December, up from $393,373 in November, when prices were 5.9 per cent below the peak.
The year had shown a dramatic and somewhat unexpected level of turnaround in house values, QV said in publishing the December figures today. After reaching their peak in late 2007, house values dropped steadily throughout 2008. At the beginning of 2009 two camps developed - those that considered the market had much further to fall, and those that considered it was near the bottom, and perhaps heading towards a good time to buy.
The property market was strongly influenced by consumer confidence, and as consumer confidence began to grow in 2009, so did property values in the main centres, QV valuation manager Glenda Whitehead said.
Driven by the main centres, nationwide values rose 5.1 per cent between the market bottom in April and the end of the year. For the main urban areas, the rise since April was 6.5 per cent, taking values in those areas to just 3.9 per cent below their peak.
Values in the Auckland area rose 5.2 per cent during 2009 and finished the year with an average house price in Auckland City of $615,459, on the North Shore of $586,075, Waitakere $405,573 and Manukau $467,501.
Wellington rose 5.1 per cent, Christchurch 4.6 per cent and Dunedin 4.9 per cent. Hamilton grew only 1.8 per cent and Tauranga ended the year with an increase of 0.1 per cent. Provincial centres saw a less pronounced rise in house values during 2009, increasing 3.2 per cent from the low early in 2009 to now be 7.7 per cent below their peak, Ms Whitehead said.
The value of houses in rural areas remained relatively static for most of the year, but a rally late in the year led to values increasing 1.3 per cent since early 2009 to now be 6.5 per cent below the market peak.
Price changes varied considerably in provincial centres over 2009, with Whangarei ending the year down 5.2 per cent and Gisborne down 5.6 per cent, while Rotorua was largely unchanged with a 0.4 per cent gain, and New Plymouth lifted 7.1 per cent.
Reports indicated residential property listings had been more abundant in provincial and rural areas, with demand lower due to localised economic factors such as closures of local industries and subdued earnings for the rural sector dampening confidence, Ms Whitehead said. "There are now signs of confidence returning to the provincial markets, with activity in more recent months showing value increases."
For 2010, QV expected sales activity would lift in the first few months as owners who held off in 2009 decided to move.
"If the increase in values in the main centres is being driven by a lack of properties for sale, therefore an increase in sellers tempted to the market by the improved prices should see a levelling off in values," Ms Whitehead said. "However, there still remains debate about whether the current listing shortage is actually driving up values or rather there is actually an underlying shortage of houses in the main centres - that debate will no doubt continue."
Source: NZ Herald - 11 Jan 2010
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