12 Aug 2008

Quotable Value tips shallow fall in house prices

5:48 am on 12 August 2008

A 2.2% fall in property values in the past year suggests the housing market slump will not be as deep as previously thought, says Quotable Value.

Figures for the 12 months to July released by the government agency show a 2.2% decline in the residential property market nationwide.

For the year to the June quarter, however, Quotable reported a rise in prices of 0.1%.

The average sale price held steady at $393,370.

Of the five main centres, Dunedin recorded the biggest drop, with prices falling 6.8% over the year.

The Auckland region was down 3.6% and the lowest drop was in Wellington, where house prices fell 1.6%. Hamilton prices slipped 5.4%, and Christchurch prices 2.1%

Provincial centres

Most of the main provincial centres showing property values less than the same time last year.

Gisborne dropped sharply, by 8.7%, Whangarei declined 0.6%, Rotorua 0.4%, Napier 2.0%, Hastings 1.7%, New Plymouth 4.7%, Wanganui 1.3%, and Palmerston North 5.2%. Nelson dropped by 2.7% and Queenstown Lakes to 3.1%.

Invercargill went against the trend, showing year-on-year growth of 5.4% although this has dropped from a high of 36.4% last October.

Quotable Value says that at the current rate of decline Invercargill will join the rest of the main centres with falling property values within a month or two.

Recovery debated

Quotable Value spokesperson Blue Hancock says a rise in the number of property listings, coupled with falling interest rates and low unemployment, could result in the market stabilising within the next two months.

Mr Hancock says the market is very resilient.

However, some business analysts believe a recovery will take much longer.

ANZ chief economist Cameron Bagrie expects it will take 12 to 18 months before the market reaches its lowest point.

Bernard Hickey, from financial website interest.co.nz, says predictions of a minimal housing market slump are not credible, and predicts a fall in nominal house prices of 30% over the next two years.