House values grow at slower pace

PROPERTY VALUES: Residential property prices have ontinued to pull ahead of year ago levels, but values in many areas have flattened.

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Residential property prices continued to pull ahead of year ago levels in February, but values in many areas have flattened in the past few months, new figures from QV Valuations show.

Some investors are also thought to be already selling up now rather than waiting for the Government to bring in property tax changes.

According to the QV residential property indices for February, published today, property values last month were 5.5 per cent up on a year ago, compared to January's 4.4 per cent gain on year earlier figures.

Nationally, values were now 3.9 per cent below the peak of the market in late 2007, QV said.

The national average sales price rose to $416,074 last month from $409,807 in January, but QV cautioned that figure could be biased depending on which part of the market was active.

Glenda Whitehead of QV Valuations said values were expected to stabilise in coming months reflecting uncertainty about factors such as employment, pending interest rate rises and continued tight lending criteria.

There could be more certainty in the market after the May budget when details were provided about personal and property tax changes, and interest rate changes were clearer.

The continuing rise in the annual change in values was masking developments of the most recent months, Ms Whitehead said.

In main urban areas values had grown since mid-2009, but that rate of growth had recently begun to slow, she said.

In provincial areas growth had slowed even more, and across rural residential areas house values fell slightly during the past month.

Sales activity had picked up during February, after a relatively quiet January, and was back to levels similar to those throughout 2009, Ms Whitehead said.

New listings had risen significantly and it was expected those would convert to higher sales numbers in coming months.

The rise in sales and listings was expected, as February and March were typically the busiest months.

"The market remains patchy and buyers cautious. Well presented, good quality properties are continuing to sell quickly and at healthy values, whereas those with less desirable attributes are proving hard to shift.

"There is activity at the lower end of the market, driven mostly by first home buyers. Fewer investors are actively buying, and some are selling their investment properties now rather than waiting for the changes in property tax to be announced in the May budget," Ms Whitehead said.

Banks continued to take a cautious approach to lending, with valuations required where borrowers had relatively low deposits, and while more new houses were being built, many were for clients under contract.

"Builders are still struggling to secure finance if they do not have these underlying sale agreements. Demand for new houses is steady but still nowhere near the boom levels of a few years ago when they couldn't be built quickly enough," Ms Whitehead said.

Values in the Auckland region continued to rise in recent months and are now 8.7 per cent up on the same time last year.

The Wellington area is 6.7 per cent up, and Christchurch 6.9 per cent up. Values in other main centres have been stable in recent months, but remain above last year by 4.3 per cent in Hamilton, 1 per cent in Tauranga, and 6.2 per cent in Dunedin.

Unlike the main centres, values in the provincial centres have been more variable over recent months, although values are still above the same time last year in almost all areas.

Rotorua is 2.5 per cent up, Gisborne 2.6, Napier 5.9, New Plymouth 7.9, Wanganui 1.1, Palmerston North 6.1, Nelson 5.5, Queenstown Lakes 0.8, and Invercargill 4.3 per cent. Whangarei is the only centre still below last year at 1.8 per cent, but that is an improvement from January.

- NZPA