Houses up and down

MIKE BISHARA

WHETHER you feel happy or sad about the state of the property market could well depend on who you talked to last.

Property agents will tell you residential homes in rural Rodney sold in May for $27,000 more, on average, compared with May last year.

It's even better in the Hibiscus Coast where properties in May were fetching on average $45,000 more than the year before.

And in June, the average house sale price across Rodney of $417,000 was right in line with the average for the past 12 months and 4 percent higher than the average price in June last year.

"Across the Auckland region house prices edged lower in June as the traditional winter downturn occurred, but Rodney average prices remained buoyant," says Barfoot & Thompson chief executive Wendy Alexander.

"It was one of only four areas in the region where the monthly average price was the same or higher than the average for the year to date.

"The housing measures announced in May's budget certainly led to a decrease in the number of homes sold, but in this area they had limited impact on prices," she says.

For Barfoots, the greatest sales activity in June was in Red Beach and Wellsford.

QV Valuations says in its June monthly report that nationwide residential property values are 5.2 percent above the level of a year ago.

If you listened to the doomsayers, they would tell you that rural Rodney properties sold on average for $49,000 less in May than in April. And they are right too.

In Hibiscus Coast the fall in the average price is $35,000 – comparing April and May sales.

Glenda Whitehead of QV Valuations says no evidence had shown up so far of May's budget having any dramatic impact on the property market.

For now, sellers with unrealistic price expectations are being bypassed by buyers.

Values across the board in June were 4.3 percent below the market peak of late 2007, having been 4.1 percent lower in May and 3.9 percent lower in April.

Earlier this month Westpac predicted house prices will fall 2 percent this year and 2 percent next year as interest rates rise.

The bank says house prices were grossly over-valued in 2007 and are now only slightly over-valued.

You would not have to be too smart to know that no single factor drives the property market on an exclusive basis, but a number of factors apply if you are trying to work out a trend – long or short-term.

The number of days it takes on average to sell a property is a good measure of the health of the market.

In May 2009 it was taking 72 days to sell a property in rural Rodney and 62 days in the Hibiscus Coast, and in May this year only 52 days for rural Rodney and 43 for the coast.

But how many properties are actually being sold and how many are on the market?

Rodney has a lot of properties on the market compared with its near neighbours North Shore and Waitakere, but a lot fewer for rent.

Using TradeMe as an indicative measure, Rodney has 2215 properties listed for sale out of the 39,800 homes in the district. Waitakere has nearly 200 fewer houses on the market but has nearly 62,000 houses.

Even on the North Shore, which has more than double Rodney's population and double the number of houses, there are about 200 fewer properties than Rodney has for sale.

There is quite a glut for Rodney when compared with limited sales on the Hibiscus Coast in May which accounted for 61 of the 99 sales across Rodney.

Last May 2009 they made up 87 of the 121 sales.

The number of sales has fallen while prices have held and, to the doomsayers, this portends another dip in prices as sellers are forced to meet the market in the next couple of months if they want to quit their properties.

The more optimistic will tell you that there is always a dip in winter and that, come summer, the spark will be back.

They point to an easing in bank credit and reasonable interest rates as a stimulus.

The Bank of New Zealand says house prices are subdued because they are still well above long-term fair value and the housing boom from around 2003 ‘‘still looks a bit nutty’’.

Even if they were not, it’s hard to buy into the market if you don’t have a job.

New Zealand unemployment figures have a long way to go to return to the glory days of three and four years ago.

Many would argue that prices were driven upwards by an influx of cash-rich immigrants and too few houses around for struggling Kiwis – a scenario which looks certain to continue.

Analysing statistics has been described as the science of producing unreliable facts from reliable figures and there are always as many reasons to beat up the prospects of the property market as to disparage it.

The reality as always probably lies somewhere in between.

The economic signals of a fragile but improving economy are there, but could be easily upset by events in other countries.

And New Zealanders’ refusal to diversify into other forms of investment, and who can blame them given the spate of finance company failures, means that the health of the country’s economy remains bound to the state of the property market.

- © Fairfax NZ News