Quotable Value’s December statistics show growth in national property values eased back to 10% from 11.4% reported in November.
Monday, January 14th 2008, 12:00AM
by The Landlord
The average sale price also eased to $388,253 from $393,198 the previous month.
QV spokesperson Blue Hancock puts this down to the cost of borrowing and slowing immigration softening demand, with QV figures showing a drop in each of the last four months.
“There is nothing in our statistics to suggest that this trend will not continue into 2008, with the spring market having failed to provide the usual resurgence,” Hancock says.
ASB chief economist Nick Tuffley says he is not surprised the QV data is starting to show more noticeable drops in the annual property price growth rate, because this has been more evident in the REINZ measure already.
Tuffley expects the REINZ measure – anticipated this week – to show more noticeable slowing in March and April than in the later stages of 2007 now that the period of rapid price growth has ended.
Hancock says QV valuers report steady levels of activity in many areas of the country but a definite slowdown in others. “Prospective purchasers are definitely being more cautious.”
"The areas that have slowed the most have been those lower value areas that had been running hot: Invercargill, Manawatu, Gisborne, and Wanganui.
"There has certainly been a lot more activity at the bottom end of the market in recent months."
Tuffley foresees weakening price growth in the urban areas with high house prices and more strain being put on debt servicing costs than in smaller regional areas. “Those dairy areas I would expect over time will tend to do fairly well because there’s that extra cash injection coming through there.”
In the main urban centres, Hamilton recorded the largest decrease in annual property value growth, slowing to 11.8% from 14.5% last month. Auckland City, Christchurch and Dunedin’s growth rates all dipped by levels of between 1.5% and 1.7%, with growth easing to 9.1%, 8.2%, and 6.9% respectively. Growth eased slightly in Wellington from 11.6% to 11.4% and Tauranga decreased from 5.4% to 5.0%.
Most of the provincial centres also recorded easing growth rates with noticeable decreases in Invercargill: 29.4% (last month 34.8%), Gisborne: 7.7% (last month 14.4%), and Wanganui: 8.2% (last month 13.5%). Growth in property values slowed to 12.7% in Queenstown and remained at 11.5% in Rotorua.
Richard Evans, director of property management company Rotorua Rentals, says the region has seen a fall in sales volumes of up to 50% – which has resulted in more, and better, rental stock, with people taking properties back off the market because they aren’t selling.
Easing annual property value growth was also reported in Whangarei 10.7%, New Plymouth 3.4%, Palmerston North 8.4%, and Nelson 10.8%. Conversely, Napier’s growth rate increased to 7.7% this month (from 7.1% last month).
“We have seen a trend where Southland price growth is starting to ebb a bit, but it’s been coming off such a fantastic base – the growth there has just been phenomenal over the last year or so – and at some stage that’s going to moderate,” says Tuffley.
“But I would expect that Southland will still tend to look fairly reasonable over the next couple of years and probably the other dairy areas are likely to look fairly ok, whereas the main developments for urban areas are mortgage rates up, petrol prices up.”
