This is an update from QV for the month of January.
From where I was on the ground there seemed to be alot of positives and enthusiasm as the interest rates have come back to record lows and this coupled by the drop in prices making housing affordability more realistic than it has been for many years. Although with the tightened up criteria the banks have been excersing it is making it hard for investors and first home buyers to stay or enter into the market. The fact of the matter is that prices are expected to drop further, sales volume isnt expected to rise by much but interest rates will drop further as the RBNZ tries to stimulate the markets. But there still is very much alot of uncertainty within the market. There are some that see that there are opportunities out there to make positive cashflow out of investments where others think that the market still has to much recovery to go before it will be viable to make any commitments.
My opinion is that prices will continue to fall for most of this year. I feel the mortgagee market is going fuel this downward spiral into proabably the third quarter. This doesnt mean that opportunities are out there because they are and are waiting for any one of us to snap up, and generally they are pretty quickly. If you want some more reason to think why property prices may drop have a look at the housing affordability post on here. As with any market or situation its what you make of it. Here is what the official word is from QV..
Christhchurch Property Trends
Property values in Christchurch decreased by 8.8% over the last year (calculated over the three months ending January 2009 in comparison to the same period last year), deteriorating further from the 8.0% annual decline reported in December 2008. The average sale price for the city decreased slightly from $348,953 to $347,157.
Melanie Holcroft of QV Valuations said; “The change in property values experienced between October and December 2008 showed that the rapid decline could be easing, but these latest figures show that the situation is still worsening. Average sales prices continue to decline; this could be influenced by low sales volumes and the mix of property being sold.”
“There have been anecdotal signs of an increase in investor activity, driven by decreasing property prices and lower mortgage interest rates. In short, if consumers have the equity or available funding it appears to be a good time to buy residential investment property” Ms Holcroft said.
“Overall the market has continued to soften, but at a slowing rate on those levels experienced in mid 2008. Lower interest rates have been slow to stimulate market activity, a pattern usually observed. This is attributable to a decrease in confidence in the employment market and rising food and fuel prices. We expect this pattern to continue for the next quarter” said Ms Holcroft.
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“The signs of a slight recovery in property values we saw at the end of 2008 have not continued into 2009, with the market dipping further. The number of properties selling remains at low levels which is also typical of activity around the holiday period” said Blue Hancock of QV Valuations.
“Declining interest rates would normally stimulate buyer activity, but concerns over job security, and a more cautious approach to lending by financial institutions seems to be preventing this. Many buyers also appear to be holding back in expectation of further property value and interest rates drops throughout 2009” said Hancock.
“Home affordability has definitely improved and there are good opportunities in the current market for those who can afford it, with motivated vendors and decreasing interest rates. We are also seeing more investors returning to the market, seeing better returns from cash flow in the current property market than returns from other forms of investment” said Hancock.
Most of the main centres are once again showing further declines in value compared to 12 months ago. The Auckland area has slipped back to -9.0%, Hamilton to -10.0%, and the Wellington area to -8.5%. Both Christchurch -8.8% and Dunedin -8.3% have also declined further. Tauranga was the only main centre to not decline further, remaining flat at -9.0% compared to last year.
As has been the case for several months, the provincial centres are showing variability. While all areas have values less than 12 months ago, Wanganui ( 4.5%), Nelson (-7.2%) and Queenstown Lakes (-8.5%) have all improved slightly over the last month. Invercargill remains static at -9.1%, while Whangarei ( 10%), Rotorua ( 11.9%), Gisborne (-10.6%), Napier (-9.1%), New Plymouth ( 5.5%) and Palmerston North (-10.2%) have all declined further.
Regards
Deon