The latest property price data from QV sure makes for interesting reading. I know ‘data’ and ‘interesting’ is for many an oxymoron, but I’ll do my best to prove that it is worthwhile information.
The key reference point to look at in QV’s March stats is the housing market peak of 2007. Ah, 2007. Those were good times weren’t they? There was no global economic crisis to speak of, and barely anyone outside the US had heard of Fanny Mae or Freddie Mac. Besides we had other issues, what with being torn between celebrating Willie Apiata’s heroics and mourning the extinction of the South Island Kokako.
Anyway, the figures. Nationally, house values have risen 0.5 percent over the past three months, and 3% over the year. This still leaves values 3% below the 2007 peak.
You would barely notice that in some parts. Whilst having a relatively quiet quarter with a 0.8% rise, Auckland prices are up five percent since this time last year and are now 2.2 percent above the 2007 peak. The old Auckland City boundaries are seeing the most action, especially the southern part which includes Mt Eden, Blockhouse Bay and Penrose.
Elsewhere, homebuyers might be encouraged by developments in the sunny Hawkes Bay, where prices have dropped by well over one percent. Those in Northland and Dunedin looking to sell will be pleased with the 3.1% and 2.6% increases respectively.
Ok, enough numbers for a while. What is the cause of the Herald subeditors’ great excitement? QV’s diagnosis, as I’ve discussed previously, is “first home buyers having enough confidence to enter the market, while some existing home owners are now ready to make a move they may have been delaying for several years.”
The key word there is ‘some’. Auckland and Christchurch markets are still seeing a lack of supply, while Wellington is also reporting some stock shortages.
It’s not as if no one’s selling. Last month Barfoot & Thompson sold 63% more houses than in February, which was also a 16.4% increase on March 2011. And yet this increase still doesn’t seem to be enough to satisfy buyers’ demands.
So what now? It might be that, as prices rise, more sellers will come onto the market and things should get closer to equilibrium. One could also predict that with the Reserve Bank not looking to raise interest rates until 2013 we might continue to see low mortgage rates causing demand to outstrip supply.
The most accurate prediction however, in my humble view, is to expect the unexpected. With the market anything but quiet, we may not want to dig out our Sean Kingston CDs just yet.
