Property values drop 9.3%

Thursday 9th April 2009

New Zealand property values fell 9.3% last month, led by declines in Auckland City and Manukau, as rising unemployment and waning job security counters the benefits of lower borrowing costs.

The decline in March follows an 8.9% drop in February, according to the QV Valuations report. The figure is calculated over the three months ending in March from the same year-earlier period.

"Some investors are on the prowl again, but feedback indicates they are scoping the situation and only stepping in where the numbers stack in their favour, or they can get a steal," said Genda Whitehead, a QV valuer in Auckland.

Enquiry levels are up and "what are seen as low interest rates are definitely one of the drivers behind this, however caution remains due to wider economic factors such as job security," she said.

Shorter-term and variable mortgage rates have tumbled with the central bank's rate cuts since July last year, though longer-term fixed rates have begun climbing, prompting Governor Alan Bollard last week warned that longer-term wholesale rates were "out of line" with the bank's expectations, given any recovery in economic growth is likely to be gradual. Bollard's expected to cut the official cash rate by 50 basis points to 2.5% at the end of the month.

The QV report shows the average sale price slipped to $378,399 last month, from $383,786 in the previous month. The average price has slipped 2.7% in the past 12 months.

Property values in Auckland declined by 10.1% in the three months through March from a year earlier, from a 9.4% decline in the period through February. The average sale price fell to $495,892 from $502,193. In Hamilton, property values fell 9.3%, compared with a 10.1% decline in the previous month, while the average sale price rose to $338,433 from $334,068.

Tauranga property values fell by 8.7% in the latest period, down from the 8.4% annual decline in February. The average sale price rose to $436,012 from $421,612.

Property values in the Wellington region fell 8.7% in the three months through March, after a 9.3% drop in February. The average sale price fell to $429,848 from $433,339.

Christchurch property values fell 9.7%, a deterioration from the 9.1% decline in the previous month, while the average sale price rose to $349,442 from $344,816.

In Dunedin, residential property values fell 8.8%, improving from the 9.4% decline a month earlier. The average sale price was little changed at $258,297.

By Jonathan Underhill

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