New Zealand’s property market heats up
December 11, 2009 - Auckland
Originally published on PropertyWire
Residential property prices in New Zealand are continuing their upward trend with values in Auckland reaching a 23 month high, according to the latest published figures.
Prices in Auckland went up 3.1% in the three month period ending in November from 2.5% in October, the data from QV Valuations shows.
As the year ends the company's analysis shows that total market activity was relatively static during 2009 due to a shortage of property for sale as the economic outlook meant many potential sellers decided to stay put.
Activity is expected to increase in the New Year. 'We expect that January and February will lead to further increases in activity and lead to a more balanced market,' said QV spokeswoman Glenda Whitehead.
She added that more properties are entering the market, particularly in the major centres, and this should damp the upward pressure on prices as buyers compete 'vigorously for the few available properties.
The report also shows that overall average property prices rose 1% in the last year and are now at $393,373.
Auckland house prices reached a 23 month high in November, according to the city's largest real estate agency Barfoot & Thompson.
"For the third consecutive month, the average price achieved increased, confirming that prices have consolidated around present levels," said Peter Thompson, managing director of Barfoot & Thompson.
"Auckland property has now recovered all the losses experienced over the past two years.
The level of activity and strength of prices in the housing market is a strong signal that in Auckland at least property has returned to being seen as a sound, medium to long-term investment option," he added.
Thompson said that the difference between current activity and during the height of the property boom in 2007 is that the market is more rational and measured.
"While low interest rates are a factor, buyers are committing on the basis of the property meeting their check lists and views about value for money.
They are not being driven by concerns that they must act or they might miss out," said Thompson.
However, not everyone is pleased about the trend. Shamubeel Eaqub of the Institute of Economic Research said it could have far reaching and damaging effects.
"House prices are showing renewed over-valuation. This will intensify as interest rates rise.
A correction in the housing market is necessary to reduce the economy's vulnerability to house price movements.
The sooner there is a change, the less the likelihood of a larger and more painful recession further down the track," he said.
This article has been republished from Property Wire.
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