House values climb but many vendors choose to stay put

In Auckland, property values are now 3.1 per cent above last year. Photo / Herald on Sunday

Property values are continuing their climb in the main centres but many vendors are choosing to stay put rather than sell their homes.

Figures released today from Quotable Value show nationwide values are up 4.1 per cent from April but are still 5.9 per cent below the market peak of late 2007.

The average sale price across New Zealand increased to $393,373 in November from $389,198 in October.

The increase is largely driven by the main urban areas which have risen 4.7 per cent since the low.

In Auckland, values are now 3.1 per cent above last year with the average sale price for the region increasing from $506,642 to $519,051.

Manukau East was down from 7.2 per cent to 6.6 per cent but still remained highest in the region ahead of Onewa on 5 per cent while Auckland City had a marginal increase to 2 per cent.

QV spokeswoman Glenda Whitehead said a continued shortage of listings and pent-up demand in some areas had increased buyer competition, pushing up prices in the process although the usual pick-up in activity over spring had not happened.

"While turnover activity, measured by days taken to sell a property, is improving in the main centres, total activity levels continue to be low," she said.

"This is driven by the shortage of listings as prospective vendors decided to stay put rather than sell. This situation differs in the regions where listings are more abundant, but actual turnover is slower."

Wellington (2.9 per cent), Christchurch (2.8 ) and Dunedin (4.1) also saw a rise in property values.

In the provincial centres, Napier (0.2 ), New Plymouth (6.6), Palmerston North (2.3), Nelson (1.1) and Invercargill (0.4) were above last year's values.

Ms Whitehead said there were signs more properties were coming on to the market which would help to ease pressure on prices.

Building consents for new homes continued to increase in response to improving market confidence.

Net migration is also on the rise, driven by fewer departures and indications were that people watching the market had decided that now was the time to buy and sell.

"We expect that January and February will lead to further increases in activity and lead to more balanced market conditions," said Ms Whitehead.

Institute of Economic Research principal economist Shamubeel Eaqub agreed there were positive signs in the housing market but warned these would likely be temporary with mortgage rates likely to increase with a raised official cash rate in the next 12 months.

"What that will do is expose the over-valuation in the housing market," he said.

"At the moment it feels like housing is affordable but it is not really when you take into consideration where interest rates will be in 12 months."

Mr Eaqub cautioned that net migration would begin to slow next year as the Australian economy improved. "A lot of demand has been from Kiwis not leaving but we think there will be a reverse next year."