Property values fall 8.9%, home affordability rises

Monday 9th March 2009

New Zealand property values dropped 8.9% last month, helping stir a revival in sales as mortgage rates fall.

The decline in February follows an 8.3% drop in January, according to the QV Valuations report. The figure is calculated over the three months ending in February from the same year-earlier period.

"There are definite signs of more activity in the market, with more listings, more genuine buyer interest, and more sales," said Blue Hancock a spokesman for QV Valuations. Buyers are still cautious and quality properties in good locations are attracting the most interest, he said. Vendors are also becoming "more realistic about their property's current value," he said.

Reserve Bank Governor Alan Bollard is expected to cut the official cash rate by 50 basis points to 3% this week, a record low. Still, economists say Bollard is getting closer to the bottom of his easing cycle, the steepest since the OCR was introduced in 1999.

Floating rates have dropped the most in the past six months, with ANZ's variable mortgage sinking 3.5 percentage points to 6.95% and Westpac's by 3.96 points to 6.49%, according to goodreturns.co.nz. In the same period, five-year fixed rates fell just 2.4% at ANZ and 2.1% at Westpac, and may be nearing their lowest levels, as banks bet wholesale rates will climb in the longer term.

The average New Zealand sale price for February was little changed at $383,786. Over the past year, the average sale price has dropped about 2%, less than the QV index, reflecting a drop-off in sales of low-value properties, QV said.

"Our expectations are that sales volumes will remain relatively low for the rest of this year, with values continuing to ease back marginally" Hancock said.

Property values in Auckland declined by 9.4%, from the 9% slide in January. The average sale price rose to $502,193 from $496,618. In Hamilton, property values fell 10.1%, little changed from the 10% rate in January, while the average sale price fell to $334,068 from $342,347.

Tauranga property values fell by 8.4% in the latest period, an improvement from the 9% decline in the previous month. The average sale price decreased to $421,612 from $421,151.

Property values in the Wellington region fell 9.3% in the three months through February, after an 8.5% drop in January. The average sale price rose to $433,339 from $431,088.

Christchurch property values fell 9.1%, from an 8.8% decline in the previous period, while the average sale price fell to $344,816 from $347,157.

In Dunedin, residential property values fell 9.4%, compared to an 8.3% decline reported in January. The average sale price rose to $258,212 from $254,088.

By Jonathan Underhill

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