I wish to say that 2010 has been a challenging year for most people in Christchurch. What is for most people the biggest asset they own the Canterbury Earthquake of September 4th Damaged many to a point where it starts to hurt peoples wealth which makes it hard for anyone to move forward with real estate. Here is the Update for 2010 for the Nation!
Property values begin to stabilise
New Zealand property values are beginning to stabilise according to the QV residential property indices for November. This time last year values were steadily increasing from a low in early 2009. This increase continued until March 2010, then values began to gradually decline. As a result the gap between values this year and last year has closed further to 0.3 percent. The rate of decline has slowed in recent months and it appears as if values are beginning to stabilise.
Values are now 5.6 percent below the market peak of late 2007. “There continues to be a relatively low number of house sales, as has been the case for most of the year. Securing funding from banks remains difficult for some potential buyers, while others are taking their time over purchase decisions” said QV.co.nz Research Director, Jonno Ingerson. “Not all parts of the market remain slow moving however, with QV Valuers in the main centres still seeing quality properties in established and traditional areas selling quickly and for good prices. This is in contrast to the large number of properties that have now sat unsold for several months” said Mr Ingerson. “There has been an increase in the number of properties put on the market over the last few months, as is typical of this time of year. However with the low level of sales activity, this is increasing the stock of unsold property. We now expect that many buyers will delay any purchase decisions until the New Year” said Mr Ingerson.
While unrelated to the QV index, and a less reliable measure of value change, the average New Zealand sales price over the last three months has dropped to $397,805 from the $399,055 reported last month. There are signs that nationwide values are beginning to stabilise, with the strongest signs of this in the Auckland region where values have now been stable for several months. Compared to the same time last year, values are now 1.8 percent higher, but most of this increase occurred between November 2009 and March this year. After falling slightly for a couple of months, values have been more or less stable since June. Values in Hamilton and Tauranga have also stabilised in the last couple of months after slightly declining for most of the year. Hamilton is now 1.6 percent below the same time last year, and Tauranga 0.9 percent below.
Compared to the other main centres, values in the Wellington area have dropped the most since March this year. Values are now 1.6 percent below the same time last year although in the last month there are the first signs that values in Wellington are also stabilising. The property market in Canterbury is now beginning to recover well after some initial disruption following the September 4th earthquake. According to information in reports published by the Earthquake Commission less than 5% of the properties in Canterbury suffered major land damage. Since the earthquake there have been very few sales of houses in badly damaged areas, but properties with little or no damage are now beginning to attract good interest. The sales process is still taking longer than usual as buyers, banks, and insurance companies complete thorough checks on the properties before completing the sale.
The significant slowdown in the number of sales, and the delays in the overall sales process in Christchurch following the earthquake mean that the QV residential price index cannot yet be used to measure the change in property values after the earthquake. Preliminary results show that property values have bounced back after the earthquake with October 3.2% higher than the pre-earthquake trend. Values in Dunedin have continued to be variable in recent months, but in general have been in gradual decline all year and are now 1.2 percent below the same time last year.
Values remain above the same time last year in Wanganui (1.3 percent) and Nelson (1.9). Values are similar to last year in Rotorua (0.9), Hastings (0.6), Napier (0.9), New Plymouth (-0.6) and Queenstown Lakes (0.9). Values are below last year in Whangarei (-2.1 percent), Gisborne (-5.1), Palmerston North (-1.3) and Invercargill ( 1.7). Where I live in Christchurch this is what has been said The significant slowdown in the number of sales, and the delays in the overall sales process in Christchurch following the earthquake mean that the QV residential price index cannot yet be used to measure the change in property values after the earthquake. Melanie Swallow of QV Valuations said “the number of sales slowed considerably in the weeks immediately following the earthquake, but activity has begun to pick up again.
Agents and mortgage brokers comment that it is still taking a longer to put deals together with additional requirements for engineers’ reports and delays getting LIM reports, but the level of activity is still very encouraging”. “There has been a lift in the number of listings to market, which is what we would have expected to see in September if it had been a typical seasonal market without a magnitude 7.1 earthquake” Mrs Swallow said. A report published by the Earthquake Commission on November 30th identifies the areas in Canterbury that have been affected by significant land damage. This shows that less than 5% of properties have significant land damage requiring remedial work. The majority of properties in Canterbury have either no damage, or minor damage as a result of shaking.
There have been very few sales in areas with significant land damage, as these properties generally require significant repair work. Almost all the sales since the earthquake are from areas that did not suffer land damage. Values in Christchurch were gradually declining in the months prior to the earthquake. Values since then have increased again, and in October were 3.2% higher than the trend. A full report of the change in the property market since the earthquake is available on the QV website. Mrs Swallow said “agents report plenty of enquiry and a steady demand for quality housing in unaffected suburbs, which is exactly what we would expect to see.
The market has had time to take stock of things and now we are seeing indication of some normal market activity beginning to emerge”. “The local economy is slowly being stimulated by insurance and EQC payouts, bolstering the construction and property industry. This has helped kick start the property market as Canterbury puts itself back together, although delays in the process can be frustrating for people trying to move forward with their lives. On the bright side it will ensure a steady volume of work for some time for Canterbury trades people” Mrs Swallow said. “Agents, mortgage brokers and bankers have made anecdotal comments that there is a ‘wait until the new year’ sentiment in the market. We expect to see a lift in activity in early summer. The amount of activity at present is a positive sign as the region looks forward to 2011” Mrs Swallow said