No Spring Boost for New Zealand Properties

For newcomers from the UK, houses in New Zealand have not been so well priced for some time. The average sale price of a house in New Zealand has decreased to $379,854 (£134,700) from August’s $391,487 (£138,825). Property values have now declined 5.8 percent over the calander year. UK buyers are also benefitting from the recent strengthening of the pound against the New Zealand dollar.

Commenting on falling house prices in New Zealand, Quotable Value’s spokesperson Mark Dow said:

“Indications last month that a more optimistic mood had come over the market have since evaporated. We are moving into an economic recession and there is plenty of speculation that things will get worse before they get better. Uncertainty about the impact of the global credit crisis, the usual lack of activity prior to an election, and significant tightening of lending policies by the banks is contributing to pessimism in the property market and there is little expectation of any spring resurgence.”

Changes to lending criteria from the major banks, meaning larger deposits are now required, is reducing demand and prices for homes, especially for first time buyers.

New Zealand’s central bank has so far resisted cutting interest rates further and they remain at 7.5 percent.

House Prices in New Zealand
Three Months Ending September 2008

Location	Average House Price (NZ$)	Comments
Auckland Region	$495,161 (£175,589)	Property values in the Auckland region fell by 7% over the past year. There was a low volume of property sales and many vendors have been unable to sell in the last few months. Some of these vendors have now chosen to rent their property. The flow on effect of this is that more properties are available for rent and there is now an over supply of rental property in some areas.
Hamilton	$353,465 (£125,342)	Hamilton’s property values decreased by 8.8% over the past year down from the 8.4% fall last month. However, the average sale price for the city rebounded in September, up from an eighteen month low of $335,292 in August. This increase is the result of a greater number of houses selling in the higher price bracket.
Wellington Region	$424,098 (£150,389)	Wellington’s property values decreased by 5.4% over the past year. Declining property values continue in Wellington with no sign yet of the seasonal spring lift in activity and sale price. Any potential change to the present trend is being clouded by the uncertainty of the international financial markets. The downward trend in value is expected to continue until there is more certainty in the market and increased availability of finance.
Christchurch	$356,357 (£126,367)	Property values in Christchurch decreased by 7.1% over the past year. The sharpest decline in property values occurred in the Eastern Suburbs, Central City and Northern Suburbs. There is a flight to more quality homes in this buyers market, with investors and first home buyers being more discerning. There is also more pressure at the top end of the market.
Dunedin	$271,971 (£96,443)	Dunedin’s residential property values decreased 8.5% over the past year, however the number of sales increased for September. This may be a result of vendors realising they have to meet the expectations of the market if they want to sell, rather than being an indication that the market is picking up.
Tauranga	$446,721 (£158,411)	Property values in Tauranga decreased by 7.6% over the past year. The decline in the property market has picked up momentum in Tauranga with no type of property immune. Whilst the market had been tracking poorly this year, it seems that over the last month it has hit a brick wall.

* Assumed exchange rate is £1 = NZ$2.82
** New Zealand’s average house prices are not directly comparable with the UK’s because, unlike the UK, the average home in New Zealand is a detached bungalow.