Auckland prices starting to stabilise

QV's Residential Price Index for August shows that property values in the Auckland region are just beginning to stabilise.

Friday, September 10th 2010, 12:00AM

by The Landlord

However they have dropped by 0.7% since March this year. In contrast, values increased by 6.7% in the seven months to March.

Consequently, values now sit 5.9% above the same time last year, but 2.4% below the market peak of late 2007 as the graph below illustrates.

Glenda Whitehead of QV Valuations said; "Values in the Auckland region's residential market now appear to levelling, although it is too soon to tell whether this is the end of the downward trend which has persevered since March".

"August activity remained light and caution prevails, but we are seeing early signs that home owners are gearing up to make decisions. We suspect many are assessing their options and actively seeking information, as we have noticed a recent in increase in Market Valuation reports by QV's registered valuers" Ms. Whitehead said.

"Some home owners are taking advantage of readily available builders, planning extensions and alterations to their existing homes. While this data is not fed into the QV index, it is a sign that home owners view the property market positively enough to believe the cost of renovations will be recouped in the future. Cost and added-value differ, but those we speak to are making long-term decisions whilst enjoying a higher quality home in the short-term. This activity is obviously only being undertaken by those in secure employment and with good levels of equity in their homes," Whitehead said.

"The North Shore market remains patchy, with no push from buyers. The time taken to sell a property remains extended, with agents reporting low activity levels. However, we believe pre-approvals and requests for refinance are on the rise, a possible signal of a pending bounce in the spring market."

"Auckland City is characterised by general lack of confidence. Higher quality properties are still faring reasonably well and some good prices are still being achieved when the right buyer finds the right property. Buyers appear more demanding of quality, and are overlooking properties that have any negatives," Whitehead said.

"Activity in West Auckland remains subdued and buyers remain cautious, as in other parts of the region. Many home owners are refinancing their existing situation. Of the homes that are selling, those that are upgraded and well located tend to be the ones that find a buyer," Whitehead said.

"Activity in the South and South East market also remains subdued. Values do however appear to be relatively steady with fewer listings and fewer sales. The lower end of the market, sub $300,000, now appears to have become more attractive to investors, reflecting improved yields. But again, buyers remain cautious. Anecdotally, activity in the $400-600k bracket seems limited. Uncertain economic conditions continue to dampen confidence."

QV's Residential Price Index is calculated using sales data from the 3 months leading up to the month being reported. It is not the same as the average sales price, which fluctuates in line with the mix of properties selling in upper or lower price brackets. The average sales price for the Auckland region in July was $535,918.