Press Release – QV Valuations
Wellington property values are showing a downward trend in the latest monthly QV Residential Price Movement Index. However over the past year they have increased but only by 1.2 per cent.
Nationwide residential property values for July have increased 7.6% over the past year and 2.3% over the past three months. This means they are now 15.6% above the previous market peak of late 2007. When adjusted for inflation the nationwide annual increase drops slightly to 5.9% and values remain below the 2007 peak by 0.9%.
The Auckland market has increased 11.7% year on year and values are up 31.8% since 2007. When adjusted for inflation Auckland values are up 9.9% over the past year and are 12.9% above the 2007 peak.
QV National Spokesperson Andrea Rush said, “Sales volumes are between 15 and 25% lower than they were this time in 2012 and 2013 in most places. This slowdown is most likely due to the LVR speed limits and interest rate rises as well as the annual winter seasonal downturn. However the reserve bank has now said it will take a break in rate rises for the moment and banks are advertising that they will negotiate on lending to those with deposits of less than 20%.”
“Fewer lower value homes are selling due to the LVR lending restrictions and properties are also taking longer to sell especially those under $350,000. However, we are seeing more demand for higher value properties (typically over $500,000) due to out of town buyers and there is some evidence of investors looking for higher value properties.
Residential property values in the Wellington Region as a whole are down 0.9% over the past three months, but they have increased 1.2% year on year.
Wellington City have seen a slight decrease of 0.8% over the past three months, Lower Hutt is down 2.3% in the past three months and values there are now the same as they were this time last year. Upper Hutt is also down 0.3% over the past three months and 0.3% year on year. However, values on the Kapiti Coast District have increased 0.6% over the past three months and 3.2% year on year.
QV Wellington Registered Valuer Kerry Buckeridge said, “Year on year values in Wellington have increased, but the rate of increase is dropping month on month which is reflective of there being lower sales volumes than this time last year.”
“Even those real estate agents who have been optimistic up until now are saying there has been very little activity over the last six weeks and few factors to drive market growth. The Hutt Valley is very quiet, perhaps more so than Wellington.”
“Demand for apartments is low, particularly as for many the operating costs have increased due, partly, to the increased insurance costs following the Christchurch Earthquakes and also the need for earthquake strengthening in some buildings.”
“With insurance premiums now beginning to be struck at slightly lower levels than at the peak those buildings still needing to maintain high Body Corporate Levies due to the need to fund deferred maintenance or earthquake strengthening are suffering in the marketplace.”
Full release with charts: QV_RPM_release_Aug_7_2014.docx