It might have been the advent of Halloween that spurred it into action, but in October the Devonport property market awoke from the discomposed slumber of the undead.
The good news for those looking to sell their property is that there was a burst of sales in the upper end ($1m plus) of the Devonport housing market in October. A number of houses that had been on the market for around the 12 month mark finally moved, with about six houses (south of the golf course) shifting. There is yet more good news. Something close to the majority of these properties actually sold for more than their GV; this is the first time this has happened (in that upper tier) all year.
The bad news is that the average across all these properties was 1% less than their 2008 GV. Still; -1% is a considerable improvement on the last eight months in this sector, which has seen average monthly sale prices at times drop to almost 20% below GV.
Having observed the Devonport market for some time, The Speculator can confirm that the upper end of the market particularly has been in a deleterious state for almost all of 2010, with the majority of upper tier properties sold in that time not achieving the GV. In fact, some have gone for 20-30% less, and a couple even worse. As mentioned, the GVs for most of these houses were set in 2008.
However, in October the logjam shifted, with a spate of sales in the upper tier – often to Devonport residents selling their homes in the mid tier. This movement in October suggests some realignment between supply expectations and demand expectations may have finally occurred, with some sellers - their houses remaining unsold for months – accepting the market has softened. With summer coming on, this might be the start of a short mini-boom from December to March (although January is traditionally quiet for house sales).
Interestingly, the mid tier (<$1m) in Devonport (again, south of the golf course) didn’t sell a single property in October. The reason? Just about every property in this tier is a flat or apartment. No house owners in this tier are interested in selling, other than those who have been looking for awhile and pulled the trigger in October with those purchases in the upper tier. This suggests that a lot of those mid tier owners are nervous, and are not risking an upgrade. Those who did got some great deals in October, and some even better ones earlier in the year; one property going for 57% below its GV!
New Zealand market still soft
New Zealand property values in general continue to gradually decline according to the QV residential property indices for October.
Values are now 5.5% below the market peak of late 2007. After the peak, values dropped during 2008 to a low in early 2009, before rising again until early 2010, then beginning to decline again. Over the last twelve months values first rose 2.8 percent from October 2009 to March 2010, before falling back 1.6 percent since March. As a result, values are still 1.1 percent above last year, but that gap continues to close.
“The low level of sales activity we have seen all year continued through October, with sales well below both last year and the long term average. There is no sign of the traditional spring surge in sales, and we don’t expect any significant increase in sales before the New Year” said QV.co.nz Research Director, Jonno Ingerson.
“In most areas there are plenty of properties for sale, but many of these have been on the market for some time. The number of new properties coming on the market is lower than usual for this time of year. There remains a general air of caution around the property market. Some owners are choosing to stay rather than sell, some potential buyers are struggling to secure funding as lending criteria remain tight, and in general buyers are taking their time over purchase decisions” said Mr Ingerson.
“While nationwide values are declining, there is considerable variability within and between areas in response to local influences. The Auckland area is showing signs of stabilisation, while values in the Wellington area are dropping steadily. At a local level these trends also don’t apply universally, with quality properties in good areas attracting plenty of interest and often selling for good prices, while those with undesirable features are not selling or are selling at reduced prices” said Mr Ingerson.
While unrelated to the QV index, and a less reliable measure of value change, the average New Zealand sales price over the last three months has dropped to $399,055 from the $401,968 reported last month.
Unlike the decreasing national trend, values in the Auckland region have stabilised in recent months, and have dropped only 1.0% since March. Values rose steadily throughout 2009 before levelling earlier this year, so compared to the same time last year values are still 3.0 percent higher, but this gap has closed from the 4.3 percent reported last month.
Glenda Whitehead of QV Valuations said; “Auckland’s residential market feels relatively stable overall. Activity, such as open home attendance and buyer’s pre-approvals from banks, has picked up in recent weeks, and in some areas this is beginning to convert into more sales. This process seems gradual and is not the spring-surge many had hoped for, but some will take comfort in the fact that values continue to stabilise in general. Although the market continues to include mortgagee sales, on the whole, positive stories outweigh the negative ones”.
“Our valuers get the sense that those who own quality property are happy to sit on it for now, and perhaps pay down debt, with an expectation that better times lie ahead. To make a decision away from the status quo is unsettling for some, resulting in the relatively low level of listings for this time of year. A small sales trend noted is of infill sections in a number of suburbs since the beginning of this year. While availability and volume is still low, these were almost completely absent in 2008-09” Ms. Whitehead said.
“Within the former Auckland’s City boundaries, sales are ticking over without great pace or volume. In the traditionally well sought-after areas such as Epsom, Mt Eden, and Pt Chevalier, quality listings are met by a market ready to act. But properties are still a little slow to come to market, and demand remains somewhat muted. Buyers will only act if a property ticks all their boxes” Ms. Whitehead said.
“On the North Shore, there appears to be more interest at open homes of properties in lower to medium price ranges. Attendees at these open homes don’t seem to be making decisions on defined time lines, and acting only if suitably impressed. We have also noticed more properties being marketed via auction, possibly with the hope of forcing the market into action” Ms. Whitehead said.
Source for national data and information: QV