Real estate market slower in New Zealand in January than expected

The property market in New Zealand in January was patchy with overall activity slower than expected although prices are now 4.4% above what they were a year ago, according to the latest property report.

The report from QV Valuations, the country’s largest property information company, also shows that prices are now just 4.3% below the peak of the market in late 2007.
 
The average sales price across New Zealand also increased to $409,807 in January, up from the $404,671 in December. However, the average sales price is a less reliable measure of value change than the QV index as the average can be skewed depending on which part of the market is active, said Glenda Whitehead.
 
‘Market activity in January appears to have been patchy. Overall, activity was lower than expected, although our valuers are seeing an increase in activity in some sectors of the market and a decrease in others. While it is normal for sales activity to be at its lowest over the Christmas period, there is usually an increase in listings activity in January leading into the busiest time of the year in February and March. This January the expected increase appears to be absent,’ she added.
  One reason could be due to more people being forced to take additional leave this Christmas and only recently returning from holidays. ‘There are also signs of increasing indecision in the market, fuelled by uncertainty over interest rates, employment, which direction property prices are likely to move, and the recently announced tax working group recommendations,’ explained whitehead.
 
The reports indicates that the majority of the market activity, particularly in the main centres, is being driven more by existing homeowners and first home buyers rather than investors. ‘Those currently entering the market appear to be taking a cautious approach to their decisions, and are doing their research thoroughly. Some of the frantic market activity of 2009, when there were multiple buyers competing for a property, appears to have eased, at least for the time being’ said Whitehead.
 
She said it is still too early in the year to conclude the likely pace of the market in the coming months. ‘There is increasing debate around the likely impact of the options put forward by the tax working group, but movements in property market are driven by a combination of factors, and while any tax changes implemented will impact, that change will be alongside other market factors such as interest rates, employment security, and bank lending policies prevalent at the time any of those tax changes come into effect,’ she added.
 
Values in most of the main centres have continued to increase in recent months and are now all above the same time last year. Prices in the Auckland Region are now 7.3% up, the Wellington Area is 5.7% up and Christchurch 6.3% up. Values in the other main centres have fluctuated in recent months, but still remain above last year by 3.5% in Hamilton, 0.6% in Tauranga and 5% in Dunedin.
 
But the report shows that in the provincial centres values have been more variable over recent months. However, values in nearly all areas are now above the same time last year.