Residential property prices are falling, with QV figures showing that in May for the first time in 14 months the annual change in values was lower than a month earlier.Values were 5.6 percent above the same time last year, the first decline in the annual
Residential property prices are falling, with QV figures showing that in May for the first time in 14 months the annual change in values was lower than a month earlier.
Values were 5.6 percent above the same time last year, the first decline in the annual change since March 2009, having fallen back from the 6.1 percent reported for April.
According to QV residential property indices, values are now 4.1 percent below the market peak of late 2007, down from the 3.9 percent reported a month earlier.
QV.co.nz research director Jonno Ingerson said that at this time last year values were starting to rise again after reaching their low in April 2009, continuing to increase until Christmas before flattening for the first few months of this year and now starting to decline slightly.
"As a result the gap between values this year and last year is closing, and will continue to close further over the coming months," Mr Ingerson said.
The national average sales price for the three months to May also slipped to $403,070 from $405,235 in April.
"The supply and demand balance is quite different now compared to last year. In the second half of 2009 consumer confidence was returning after the recession and this flowed into the property market. Enthusiastic buyers were competing over a relatively short supply of properties and as a result prices were pushed up," Mr Ingerson said.
In the early months of this year more properties came onto the market, while buyer confidence wavered as pre-budget announcements and talk of rising interest rates put uncertainty into the minds of both investors and homeowners.
"The resulting increase in properties for sale combined with less demand has subsequently begun to push prices down."
Low activity levels in the past few months were partly due to buyers waiting for the budget announcement on May 20, Mr Ingerson said.
With the various tax changes still some time away, any effects were likely to take some time to flow into the market.
So far, there was little evidence of a change in buyer or seller sentiment with QV valuers reporting no increase in the number of inquiries. As a result QV expected that sales volumes would remain static during winter.
While the changes to tax treatment of investment property may have some downward affect on the lower value end of the market in some areas, the changes were unlikely to cause prices to drop across the board.
Instead, QV expected a general lack of buyer confidence and low sales turnover to continue to put downward pressure on prices in the short term.
Values in all main centres flattened or declined in recent months.
Across the Auckland area values were 8.8 percent above last year, back from the 9.5 percent reported last month. Hamilton values dropped to 1.7 percent above last year, Tauranga to 0.4 percent, and the Wellington area to 6 percent. In Christchurch values dropped back slightly to be 6.2 percent above last year, and a further decline in Dunedin saw the annual change drop to 4.8 percent compared to last year.
