Buyers wise up as house prices remain on rollercoaster ride

A SNAPSHOT OF house values in four cities reveals the property rollercoaster ride is far from over.

Since July last year, the Star-Times has been monitoring the registered valuation of four properties in Auckland, Hamilton, Wellington and Christchurch. In the past 12 months the four have shed $133,000 in value, but compared to the lows of March, they're on the way back up, reflecting price increases that made some property experts fearful of another debt-fuelled housing boom.

The figures also reflect the mixed messages emerging from the property market over the past week. Latest figures from the Real Estate Institute (REINZ) show median house prices have now reached a 10-year-high, hitting $355,000 in October – $3000 more than the boom-time peak of November 2007.

But only 6091 houses sold in October, down from September, and far fewer than the 7837 sales of November 2007 when the last price milestone was hit.

Experts say prices are being driven up by lack of supply and high demand – especially in the main centres. And the higher prices may not last. Last week Reserve Bank governor Alan Bollard said that the housing market recovery was likely to be limited.

Last week Westpac economist Dominick Stephens concurred, saying he expected a downturn in the market late next year.

Since July last year Quotable Value (QV) has supplied the Star-Times with regular estimates of what the four average sized and priced properties were worth, effectively tracking their market value. All four dropped significantly between July 2008 and March 2009. The worst affected house, a Wellington weatherboard home, shed $40,000 in value in that time, dropping from $465,000 to $425,000. The others had close to $30,000 shaved off their value.

The revisited valuations done at the beginning of this month, reveal that prices are coming back – albeit slowly.

What the figures show:

Auckland: From $365,000 in June 2008 to a $335,000 low in March this year – a $30,000 or 8.2% drop. Now back up $5000 to $340,000.

Hamilton: From $310,000 in June 2008 to a $278,000 low in March this year – a $28,000 or 10.3% drop. Now recovered by $4000 to $282,000.

Wellington: From $465,000 in April 2008 to a $425,000 low in March this year – a $40,000 or 8.6% drop. Now up $15,000 at $440,000.

Christchurch: From $300,000 in May 2008 to a $265,000 low in March this year – a $35,000 or 11.7% drop. Now recovered by $15,000 to $280,000.

This recovery reflects the national trend. Latest QV figures show values are now 0.2% above the same time last year and 3.4% higher than their low in April. Prices have improved most in the major centres compared to earlier in the year, led by Dunedin (up 4.3%), followed by Auckland (up 2.5%), Wellington (up 1.6%) and Christchurch up (1.3%). Hamilton had only just improved (up 0.1%) while Tauranga was down 1.4% – the only main centre to post a loss.

But values in the provincial centres were not so strong, with many areas registering value drops, most notably Queenstown, down 9.4%.

QV valuation manager Glenda Whitehead said a lack of listings was pushing prices up and market activity remained below normal spring levels.

"I think people are playing to their own financial circumstances rather than getting sucked into any market mumbo-jumbo like we got in the peak of the market – people were just doing things because everyone else was."

For more regional information go to: www.qv.co.nz