Jonno Ingerson: Market overview

Most North Shore suburbs increased in value during the first three months of 2011, with Albany (pictured), Milford, Northcote performing particularly strongly. Photo / NZ Herald Archive

Jonno Ingerson is research director at QV.co.nz.

Throughout much of 2010 the property market was relatively subdued. For the calendar year the number of sales was well below the long-term average and about the same as in 2008 when the global financial crisis affected the property market in New Zealand. Nationwide property values also declined just under 1 per cent during the course of the year. In the first three months of this year the trend of low sales volumes continued, although there was a normal seasonal lift in March. However the decline in values seen throughout 2010 came to an end as overall nationwide values stabilised. This levelling of values was largely driven by the Auckland market where, according to the QV house price index, values actually increased slightly between January and March.

As is always the case, general statements about how the property market is faring will not apply to all areas. QV valuers working in the Auckland market note that quality properties that met the majority of buyers' criteria tended to sell for good prices, particularly if there were no other similar properties available. On the other hand, properties that had features considered negative by would-be buyers tended to have this reflected in the sales price and often also took longer to sell.

When we look across the Auckland area some clear differences emerge in how house values changed in the first three months of this year according to our E-Valuer.

Most parts of the Rodney area continued to drop in value for the first three months of this year, with the exception of Helensville, Snells Beach, Warkworth and Wellsford. In contrast, the majority of suburbs in the North Shore increased in value, with Albany, Milford and Northcote performing particularly strongly. The North Shore was also the only part of Auckland where the number of sales in the first three months of the year was more than the same three months last year.

In the Waitakere area, two thirds of the suburbs dropped in value, however Glendene, Ranui and Te Atatu Peninsula all increased in value. In central Auckland, around half of the suburbs increased in value while the other half dropped. Values increased a few per cent in Point England, St Johns, Westmere and Mount Eden. The two highest value suburbs in the city, St Marys Bay and Herne Bay, both dropped in value, as did Mission Bay and Kohimarama.

Like central Auckland, around half the suburbs in the Manukau area increased in value. Clendon Park, Golflands and Highland Park all grew in value by a few per cent, while at the other end of the scale values in Manurewa East and Otara dropped considerably.

Across the rest of the North Island there is a general lack of demand, with many people choosing to reduce debt rather than buy property. Those buyers who are active are also being very cautious in their decision making. This is keeping the number of sales low as well as depressing values.

Of all the other areas in the North Island outside of Auckland, Hutt City and Wellington City are the two which continued to do better than most. In both cities there were more suburbs which had increased in value than those where values had dropped.

Some of the lack of activity in the market has been attributed to the fact that many would-be buyers expect there will be little value-growth for the next few years, or are adopting a wait-and-see approach to pick when the market appears to have stopped dropping.

The second major Christchurch earthquake in February has also had an impact on the overall market. The disruption to the local Canterbury market is obviously dramatic, but this has also flowed through the rest of the country both indirectly through denting consumer confidence and keeping interest rates low, but also directly through people moving out of Christchurch to other centres.

In the past month or so there are the first signs that values are now levelling not only in Auckland but across many other parts of the country. Consumer and business confidence also seem to be improving and, as a result, we expect values will remain more or less steady for the rest of this year, although turnover will remain slower than normal.

* From the New Zealand Herald's quarterly 'Property Report' - a guide to house prices and great places to live.