QV’s October statistics for the residential property market report a 6.8% decline in national property values over the past year (calculated over the three months ending October 2008 in comparison to the same period last year), down on the 5.8% decline reported in September. The average New Zealand sale price for October remained steady at $379,290.
“Property values have declined further in most parts of the country. Activity levels remain unusually low, especially considering that spring usually brings an upsurge in the number of house sales. Poor weather across most of the country, plus the school holidays, probably contributed to this” said Blue Hancock of QV Valuations.
“There appears to be uncertainty in the market, with many buyers and sellers waiting to see any impact from the financial crisis, dropping interest rates and the election before committing to property transactions” said Hancock.
Most of the main centres are showing further slight declines in property values. Across the Auckland area property values are down 7.7% compared to the same time last year, declining slightly from the -7.0% reported last month. Hamilton City’s values have also dipped slightly further to -9.0%, Tauranga to -7.9%, the Wellington area to -6.1% and Christchurch to -7.8%. Dunedin improved slightly to -8.2% compared to the -8.5% reported last month.
There is more variability in the change in property values across the main provincial centres. Whangarei (-8.5%), Rotorua (-9.4%), New Plymouth (-8.1%), Queenstown Lakes (-8.1%) and Invercargill (-4.6%) have all declined further. Wanganui (-6.0%), Palmerston North (-9.5%) and Nelson (-4.9%) also declined further, but only slightly. The year on year change in Gisborne remains unchanged at -10.1%, while Napier ( 4.3%) and Hastings (-5.0%) have both recovered slightly.
What’s happening in Taranaki/Taupo/Wanganui?
What does this all mean?
Well from my view the propert market is tough. Buyers are definately holding back from buying as many have been waiting to see what happens with the economy and the elections. This years general elections were held on Saturday just been and the country voted in a change government which saw National taking a comanding position in the polls. This generally has had a positive spin on the property market looking back in history. But we also have to take into account the present state of the economy not just here but all over the world.
There are good things coming out of this though. Property prices have come back coming back on from a massive increase over the previous 7 years which saw values multiply by 3 or 4 times. But now with the easing of prices this makes property just that little more affordable for the average person to buy – especially firts time buyers.
There are other factors that come into play which to me are going to have a positive spin on the housing market in New Zealand. These things are the interest rates dropping. The OCR has dropped 1.75% this year and is set to fall even more – although mortgage interest rates may stay steady for longer as the costs to the banks for borrowing overseas is still high. Fuel prices are coming down. Crude oil is the lowest its been for 3 years which has seen our petrol prices fall by 30%. Although they could be alot less our NZ Dollar is also low which has ofset some of this. But exporters are now making more money from the drop in the dollar which will stimulate our economy but there is also less demand for many products around the world as the global economy slows down.
Food prices are still high but in the last few weeks the price of milk and dairy products has dropped by 5% which is a direct saving at home. All these things are now letting families have a little more money in their back pockets. On top of all this we have seen the first round of tax cuts from the outgoing Labour Party and the National Party is promising more within the next 6 months. Thats great news for everyone.
I feel that the property market has still got a fair drop to go. Signals point to a smoothing out of the property market but we are not immune to whats happening around the world. We are not out of the dark yet. It will be some time yet before full confidence is returned to the market but if you are in a position of selling and want to move on this is as good a time as any to do it. Because what you have to remember is the capital loss you may have experienced in the last year have been felt all over and when it comes to re buying you will be buying for a less value. This is a time when you make your own destiny and many people are doing well. Its all about how you approach things and the motivated and forward thinkers are making the most of it. Sellers need to be realistic and price according to where the market is in your area. If you dont its a waist of time and money.
If you seriously need to move realise this and act accordinly. There is no point in holding out for a dream price as you may be waiting for a number of years. As an agent I dont like to see people losing but all you need to do is look at the statistics. Look at my recent sales catalogue and other things and this will compare and reassure you of whatis happening. The only thing anyone can hope for is to achieve a fair market price. And thats in any market.
3 thoughts on “New Zealand Housing Market Slows Further – But Are We Going To See Signs of Improvement Soon?”
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Its always amusing to see the ever positive “we’re at the bottom, and now’s a good time to buy” lines dragged out week after week, even though every other sign in the market (finance, equities etc) are pointing towards a lot more downside.
All this does is send the wrong signal to the vendors who hold out far to long for unrealistic prices, while buyers sit on the sidelines. The low sales volumes are testiment to this.
The sooner the message gets out there that vendors need to drop their prices the better for everyone. The realestate industry needs to start sending the right messages. Its not the buyers you need convincing.
The industry is shrinking ever day along with the market. To be fair the monthly QV report was pretty much spot on. In Tauranga where I’m based we have seen the continuation of a downward trend, and its not going to stop until something acts upon it (Newton’s law). This is out side one individuals control and the true correction wont happen until several other factor are address, these are Job security, interest rates, commodity prices and a true resolution to the ‘credit crisis’. When people feel that they are secure enough to take a risk, the market will begin to settle then I think we can say that we have reached the bottom. No doubt there are so called bargains out there but people are very cold and calculated, not willing to give a bit and really why should they this is a buyers market and the power is in there hands.
Good post and advise. When you got to go its better on your terms then the Banks. Take a look at this sad case http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=10542075
VERY insightful comments about the economy etc
Let me know; either way,
Julian