Residential property prices in New Zealand ended 2009 just 4.9% below their peak values of 2007 having shown a dramatic turnaround from earlier in the year, according to the latest figures to be published.
Values were at their lowest in April last year when they were some 9.6% below peak, the December residential index from QV shows.
Since then though, led by urban areas, prices saw a ‘dramatic and somewhat unexpected level of turnaround, the official valuation company said and confidence is now returning to provincial real estate markets as well.
For the whole of 2009, New Zealand house values rose 2.8%, with an average sale price of $404,671 in December, up from $393,373 in November, when prices were 5.9% below the peak.
At the beginning of 2009 two camps developed, those that considered the market had much further to fall, and those that considered it was near the bottom, and perhaps heading towards a good time to buy.
The market was strongly influenced by consumer confidence and as that increased in the latter half of 2009, so too did the real estate sector, explained QV valuation manager Glenda Whitehead.
Prices in the Auckland area rose 5.2% in 2009, were up 5.1% in Wellington, 4.6% in Christchurch and 4.9% in Dunedin. While Hamilton and Tauranga saw lower price growth at 1.8% and 0.1% respectively.
Provincial centres saw a less pronounced increase, rising 3.2% from the lowest point in 2009 to end the year 7.7% below peak. While the value of properties in rural areas remained relatively static for most of the year although a rally in the last couple of months saw values rising 1.3%.
QV expects sales activity to lift in the first few months of 2010 as owners who held off in 2009 decide to move. ‘If the increase in values in the main centres is being driven by a lack of properties for sale, an increase in sellers tempted to the market by the improved prices should see a levelling off in values,’ Whitehead said.
‘However, there still remains debate about whether the current listing shortage is actually driving up values or rather there is actually an underlying shortage of houses in the main centres. That debate will no doubt continue,’ she added.
Given the wider economic conditions, QV predicts that values will rise slightly throughout 2010, but not at the same rate as in recent months. ‘If the rebound in values were to continue at the present rate we will all too quickly regain ground lost since the peak in 2007, when the market was considered overpriced and highly unaffordable,’ Whitehead explained.