Sales down as market cools
5:00AM Sunday January 27, 2008
By Cliff Taylor
Some might argue that when the Auckland property market sneezes, the rest of the country catches a cold.
Others would say it's the Reserve Bank's sniffles causing people to reach for the tissues.
Whatever the case, the slowdown in home sales that hit the Queen City last year is clearly reflected across the North Island.
Real Estate Institute of New Zealand figures for last year show only the Thames/Coromandel area registered a slight increase in the number of sales, although most areas reported modest price gains.
Four areas - Mt Maunganui and Papamoa, New Plymouth, Central Wellington and Hutt Valley - registered flatlining or falling prices.
But the sun shone brightly on the Gisborne market, with a 13 per cent price rise for the year, although sales were down significantly on 2006, down 100 to 647.
Philip Searle, of Harveys in Gisborne, said he thought the figures were accurate, although earlier in 2007 the price rises were even higher.
"It's been a really good year," said Searle. "I think people from the bigger centres like Auckland, Tauranga and Hamilton have started realising there's a nicer lifestyle here.
"The people are laid-back, we've got some of the best weather, the best beaches and the best wines. It's quite common for young couples to come here to live."
Searle said this year could see a "falling off" in prices as higher interest rates bite.
"I don't think there will be a big crash, no major slide. But people who are genuine about selling have to listen to what the market is saying."
Other good performing areas around the North Island were Tauranga, with a 12 per cent rise, Northland and Palmerston North on 11 per cent, and Upper Hutt and Pukerua Bay/Tawa - outside Wellington - on 10 per cent.
Prices in Whangarei rose by 8 per cent. But Martin Dear, manager of the city's Barfoot & Thompson branch, said the market had slowed down in the past three months. His verdict was backed up by Real Estate Institute figures, which showed that sales in the city and the region generally had fallen significantly.
"The latest interest rate round has impacted on people," Dear said.
"Vendors have been sitting on their hands. We're near the bottom of the seven-year cycle. Once properties reach the right value, sales will start happening."
Dear said the outlook for Northland remained bright, and the region was still luring plenty of Aucklanders and immigrants.
"Whangarei has finally come of age. It's a combination of climate, lower prices and job opportunities.
"People are coming from all over. I've been here 20 years and it's really changing a lot. It's never looked better for us."
The situation at the other end of the North Island is less clear cut.
The institute figures show Wellington City suffered a 3 per cent drop in house prices, although the median remains high at $415,000.
Hutt Valley was also down 3 per cent, although Upper Hutt registered a healthy 10 per cent rise. The Wellington region was up 5 per cent.
John Ross, of Professionals in Hutt City, was phlegmatic about the ups and downs of the region's market.
"Nowhere in particular is booming and we're seeing a lot less growth than we were before. People have been spoilt, no doubt about it. We got used to growth of 13 to 20 per cent every single year, for year after year. Anything which drops to single figure growth feels small but it's still good."
Ross said property owners had to accept prices weren't going to double in price every five or 10 years.
He said the drop in median price for central Wellington could have been "skewed" by the shortage of million dollar homes being sold, but the capital's market was traditionally steady, in contrast to the volatility of Auckland.
"People here are typically fairly conservative. We have a large pool of Government workers, they dominate the market.
"We've always had a really stable market. That's healthy from a business planning point of view, although it's a bit sad when you hear the rest of the country is booming."
But for those seeking a bargain, Wanganui remains far and away the best bet. Even though the median price rose 4 per cent, it's still only $186,000 - much lower than any other region in the North Island.
Sutton Real Estate manager Doug Lacy said Wanganui's median price was so low, the city was being targeted by bulk-buying investors.
He said a five-bedroom house at coastal Castlecliff was advertised on the internet for $120,000 and offers had "flooded" in.
"I had a lady from Auckland last week who bought half a dozen houses," he said.
"If they can get an 8 to 10 per cent return they are happy. If a good house comes on the market you have to be quick, especially now they are marketed on the internet."
THE MOVERS
Percentage rise in house prices for the North Island outside Auckland this year.
1. Gisborne: +13
2. Tauranga: +12
3. Palmerston North: +11
THE DRIFTERS
Percentage change in house prices for the North Island outside Auckland this year.
1= Central Wellington: - 3
1= Hutt Valley: - 3
3. New Plymouth: - 2
Rural boom
While increased interest rates seem to be putting the brakes on runaway house prices, the rural property market has discovered a new gear.
Pushed along by record dairy payouts, the national median farm sales price rose from $1.150m for the quarter ending December 2006, to $1.650m in the same period last year.
Unsurprisingly, dairy farm prices have been particularly strong, reaching a record median of $3.575m in December, up from $2.5m the year before.
Real Estate Institute of New Zealand rural spokesman Peter McDonald said the rural sector had reached a new level as farmers and new investors were competing for properties in a sector with "unprecedented growth".
The lifestyle market also showed a small increase in median prices in the three months to December, up to $455,000 from $425,000 for the final quarter of 2006.
But the number of properties sold was considerably lower.
"Demand for lifestyle properties tends to mirror the residential market, which is currently experiencing a period of consolidation," said McDonald.
5:00AM Sunday January 27, 2008
By Cliff Taylor
Some might argue that when the Auckland property market sneezes, the rest of the country catches a cold.
Others would say it's the Reserve Bank's sniffles causing people to reach for the tissues.
Whatever the case, the slowdown in home sales that hit the Queen City last year is clearly reflected across the North Island.
Real Estate Institute of New Zealand figures for last year show only the Thames/Coromandel area registered a slight increase in the number of sales, although most areas reported modest price gains.
Four areas - Mt Maunganui and Papamoa, New Plymouth, Central Wellington and Hutt Valley - registered flatlining or falling prices.
But the sun shone brightly on the Gisborne market, with a 13 per cent price rise for the year, although sales were down significantly on 2006, down 100 to 647.
Philip Searle, of Harveys in Gisborne, said he thought the figures were accurate, although earlier in 2007 the price rises were even higher.
"It's been a really good year," said Searle. "I think people from the bigger centres like Auckland, Tauranga and Hamilton have started realising there's a nicer lifestyle here.
"The people are laid-back, we've got some of the best weather, the best beaches and the best wines. It's quite common for young couples to come here to live."
Searle said this year could see a "falling off" in prices as higher interest rates bite.
"I don't think there will be a big crash, no major slide. But people who are genuine about selling have to listen to what the market is saying."
Other good performing areas around the North Island were Tauranga, with a 12 per cent rise, Northland and Palmerston North on 11 per cent, and Upper Hutt and Pukerua Bay/Tawa - outside Wellington - on 10 per cent.
Prices in Whangarei rose by 8 per cent. But Martin Dear, manager of the city's Barfoot & Thompson branch, said the market had slowed down in the past three months. His verdict was backed up by Real Estate Institute figures, which showed that sales in the city and the region generally had fallen significantly.
"The latest interest rate round has impacted on people," Dear said.
"Vendors have been sitting on their hands. We're near the bottom of the seven-year cycle. Once properties reach the right value, sales will start happening."
Dear said the outlook for Northland remained bright, and the region was still luring plenty of Aucklanders and immigrants.
"Whangarei has finally come of age. It's a combination of climate, lower prices and job opportunities.
"People are coming from all over. I've been here 20 years and it's really changing a lot. It's never looked better for us."
The situation at the other end of the North Island is less clear cut.
The institute figures show Wellington City suffered a 3 per cent drop in house prices, although the median remains high at $415,000.
Hutt Valley was also down 3 per cent, although Upper Hutt registered a healthy 10 per cent rise. The Wellington region was up 5 per cent.
John Ross, of Professionals in Hutt City, was phlegmatic about the ups and downs of the region's market.
"Nowhere in particular is booming and we're seeing a lot less growth than we were before. People have been spoilt, no doubt about it. We got used to growth of 13 to 20 per cent every single year, for year after year. Anything which drops to single figure growth feels small but it's still good."
Ross said property owners had to accept prices weren't going to double in price every five or 10 years.
He said the drop in median price for central Wellington could have been "skewed" by the shortage of million dollar homes being sold, but the capital's market was traditionally steady, in contrast to the volatility of Auckland.
"People here are typically fairly conservative. We have a large pool of Government workers, they dominate the market.
"We've always had a really stable market. That's healthy from a business planning point of view, although it's a bit sad when you hear the rest of the country is booming."
But for those seeking a bargain, Wanganui remains far and away the best bet. Even though the median price rose 4 per cent, it's still only $186,000 - much lower than any other region in the North Island.
Sutton Real Estate manager Doug Lacy said Wanganui's median price was so low, the city was being targeted by bulk-buying investors.
He said a five-bedroom house at coastal Castlecliff was advertised on the internet for $120,000 and offers had "flooded" in.
"I had a lady from Auckland last week who bought half a dozen houses," he said.
"If they can get an 8 to 10 per cent return they are happy. If a good house comes on the market you have to be quick, especially now they are marketed on the internet."
THE MOVERS
Percentage rise in house prices for the North Island outside Auckland this year.
1. Gisborne: +13
2. Tauranga: +12
3. Palmerston North: +11
THE DRIFTERS
Percentage change in house prices for the North Island outside Auckland this year.
1= Central Wellington: - 3
1= Hutt Valley: - 3
3. New Plymouth: - 2
Rural boom
While increased interest rates seem to be putting the brakes on runaway house prices, the rural property market has discovered a new gear.
Pushed along by record dairy payouts, the national median farm sales price rose from $1.150m for the quarter ending December 2006, to $1.650m in the same period last year.
Unsurprisingly, dairy farm prices have been particularly strong, reaching a record median of $3.575m in December, up from $2.5m the year before.
Real Estate Institute of New Zealand rural spokesman Peter McDonald said the rural sector had reached a new level as farmers and new investors were competing for properties in a sector with "unprecedented growth".
The lifestyle market also showed a small increase in median prices in the three months to December, up to $455,000 from $425,000 for the final quarter of 2006.
But the number of properties sold was considerably lower.
"Demand for lifestyle properties tends to mirror the residential market, which is currently experiencing a period of consolidation," said McDonald.
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