NZ house prices slow marginally despite buyer interest

BUSINESSDESK: The pace of gains in New Zealand’s residential property market in the first three months of this year slowed down, reflecting easing values last month, says Quotable Value.

National property values rose 0.5% in the three months ended March 31, slowing from the 1.1% gain over the rolling three-month period through February, the government valuer said.

Values are 3% higher than a year ago and are 3% below the market peak in late 2007.

“The marginal drop in values last month follows a year of slight month-on-month increases,” research director Jonno Ingerson said.

“It is too early to say if the drop in the latest month represents a change in direction for the market.”

New Zealand’s property market has been recovering after households became wary of taking on new debt after the 2008 global financial crisis and local property bubble.

However, Auckland real estate agent Barfoot & Thompson said it had its busiest month in five years in March, signalling a pick-up in activity, if not prices.

Mr Ingerson said the increasing number of transactions has been “bolstered by first-home buyers having enough confidence to enter the market, while some existing home owners are now ready to make a move they may have been delaying for several years”.

Still, a lack of listings has kept a lid on the volume of sales, especially in Auckland, Christchurch and Wellington, he said.

The issue of housing affordability was raised yesterday after the Productivity Commission released its final report into the issue, and highlighted local government attempts to strictly apply urban limits have limited access to affordable property.

The QV figures show Auckland values rose 0.8% in the three-month period with an average sale price of $529,508, and were up an annual 5%.

Hamilton and Tauranga property values have been steady for several months, and are respectively up 1.2% and 1.3% on the year.

The average sale price over the three months ended March 31 was $332,597 and $391,569, respectively.

Wellington’s average sale price in the quarter was $437,705, and property values were up 0.2% compared to the same time a year earlier.

Christchurch property values rose 1.1% in the quarter and were up 4.1% on an annual basis.

The average sale price in the quarter was $388,629.

Dunedin property values rose 0.2% in the rolling three-month period, for an average sale price of $272,137.

The city’s property values were up 2.6% year-on-year.

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Those average prices are meaningless as QV well knows unless they meant something else. But eventually all prices must reflect reality and the economy. Those who buy now are taking a big risk that prices will hold or rise. Every real indicator suggests that prices could fall like Australian prices. Economically, a China GDP reduction means an Oz reduction which means times are still going to be tough in NZ for several years yet. Spending future income while borrowing does not seem sensible and could turn out downright risky as prices could tumble back towards the three times salary where they are meant to be instead of over 6 times at present.

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