Latest QV figures are out

[LFCNZ]

Sorry can't post the link, only have 2 posts

Can someone explain why if the annual growth rate is decreasing, then how can the average house price go up?

Is it just because in this period alot more higher valued houses were sold and alot less at the lower end, so it skews the average?

[ream]

Well if the growth rate is decreasing but still positive, then it would still go up. For instance the growth rate of something could go from 100% per year to 80% per year, which would still mean its price would be going up a massive amount annually. However it would no doubt lead to headlines in the papers about the '20% fall in prices' (which wouldn't be the case, it would be the fall in the rate of growth).

Christchurch's growth rate has fallen to 6.1% or something, so average prices are still going to be 6.1% up on a year ago. Obviously individual prices vary around this though, it's just an average and like you say high proportions of houses at different ends of the scale can skew it, as can low volumes of sales in small areas.

[Glenis]

I think this is the link

https://www.qv.co.nz/aboutus/pressreleases/slowdowncontinuesforpropertyvalues10032008.htm

[atiff]

Sorry can't post the link, only have 2 posts

Can someone explain why if the annual growth rate is decreasing, then how can the average house price go up?

Is it just because in this period alot more higher valued houses were sold and alot less at the lower end, so it skews the average?

Not exactly - it's because two numbers are being compared that are different in nature. The percentage changes from month to month are really showing the growth in prices, not if the prices are increasing or not. See these figures for example (just made up numbers, but same principles apply)

Date Price (averaged all sales)
Jan - 200k
Feb - 202k
Mar - 204k
Apr - 205k
May- 207k
Jun - 208k
Jul - 208K
Aug - 210k
Sep - 211k
Oct - 213k
Nov - 214k
Dec - 215k --- Jan-Dec is 215/200, so +7.5%
Jan - 216k --- Feb-Jan is 216/202, so +6.9%
Feb - 217k --- Mar-Feb is 217/204, so +6.4%
Mar - 218k --- Apr-Mar is 218/205, so +6.3%

Prices still increasing, but the year-on-year growth is slowing.

So when the QV report says:

a 7.7% growth ..... down on the 8.9% growth reported in January

The average New Zealand sale price increased to $393,240 this month (from $390,636 last month).

it is saying that the prices have gone up (by about 0.7%) in February, but the yearly growth shows that this pace is much slower than February last year (when I guess they went up about 2% for the month).

[McDuck]

Here is a similar thing.

You are driving your car along the motorway.

You take your foot off the acellerator.

You are slowing down, but still moving forward.

See, forward, but decreasing.