The QV national residential property index for last month shows that overall property prices fell by 8.1% over the past year, an improvement on the 9.2% decline reported for the year to April and was the second month in a row where the year-on-year change had improved.
The national average sale price fell to $371,555 in May from $372,981 in April and was 4.1% lower than the same time a year ago. During much of the last year a lack of activity at the lower end of the market artificially held average prices higher. But the lower end of the market has become more active in recent months, the QV report say.
Property values in all main centres increased slightly in recent months. The figures support recent upbeat reports from the real estate industry but some economists have warned that the pick-up in the market is unlikely to last in light of sharp rises in longer term mortgage rates.
But Glenda Whitehead of QV said that it is clear that investors are now back in the market along with first time buyers and those looking to upgrade.
'This improvement is due to the continued stabilisation of property values in recent months and contrasts significantly to a market that was declining sharply 12 months ago,' she explained. But she admitted that it is difficult to predict where property prices will go from here.
Longer term mortgage rates are expected to stay high, unemployment is forecast to rise during the next two years and dairy payouts in one of the country's main industries are set to decline.
All those factors would normally put further downward pressure on the market, Whitehead said but currently many of the traditional factors are not reflecting directly in the property market in the same way they had in the past.
'Forecast net migration is more positive, but the coming winter months are traditionally a slow period for the property market and will provide a true test for whether the recent property market revival will continue,' she said.
