The property market is showing signs of stabilising, but an industry expert says the latest QV statistics are merely a "blip" and the market will continue to slide.
QV's national residential property results for May, released today, showed that while property values declined 8.1 per cent from the same time last year, this was an improvement on the decline of 9.2 per cent reported the previous month.
The statistics are calculated over the three months ending May 2009 in comparison with the same period last year, and the same method applied to April statistics.
QV's report said May 2009 was the second month in a row where the year-on-year change had improved.
Spokeswoman Glenda Whitehead said: "The recent stabilisation of property values indicates that the wider market is moving towards some kind of equilibrium."
But Martin Evans, president of the New Zealand Property Investors' Federation, said the May statistics were indicative of a "blip", rather than a trend.
He expected the market to continue trending downward as unemployment rose and landlords with bad tenants gave up and put their properties on the market.
"I wouldn't be surprised if it didn't keep falling until early next year."
Prices would rise with demand, which could be prompted by either a surge in immigration or a shortage of properties because fewer were being built.
Mr Evans said the current market was stimulated by investors, shown by a large number of mortgagee sales being sold to trusts. His anecdotal evidence suggested most sales were around the $400,000 to $500,000 mark but investors in the $1 million bracket were also picking up bargains.
QV's statistics showed the national average sale price declined slightly to $371,555 in May from $372,981 in April and is now 4.1 per cent lower than the same time a year ago.
Values in the Auckland region declined by 7.6 per cent over the past year, an improvement on the 9 per cent annual decline reported in April.
The average Auckland regional sales price decreased from $486,986 to $483,397 over the course of the year.
Miss Whitehead said: "The buoyant mood that started post-Christmas continues, with more groups through open homes, more competitive bids at auction and the number of days to sell down in general."
There was strong demand for property from home-buyers and investors around the West, including Te Atatu, West Harbour and Titirangi.
She said it would be fair to say that the majority of activity within wider Auckland was in the "affordable" price bracket, typically under $500,000.
Investors were now focused on getting good cashflow returns and were no longer buying based on potential capital gains. "Home-and-income" style properties were still popular, probably because the extra income took some pressure off mortgage repayments.
Developers were absent from the market, as pressures and pricing had not yet attracted them back.
"While the mood is more positive, winter is now upon us and the wider economic issues have not abated. If buyer demand is maintained over the winter period, and the low listings typical of this time of year don't increase, we could potentially see a continued stabilisation of values through into spring," Miss Whitehead said.
The report noted that in recent weeks a number of QV's clients were Kiwis returning from abroad mostly Britain and Western Australia.
The annual decline of values in Hamilton eased for the third month in a row, and was consistent across all four areas of the city.
Richard Allen, a registered valuer in Hamilton, said that with a reduced dairy payout forecast for the 2009/10 season, coupled with the recession, the flattening of house prices might have been an "aberration".
"A potential lack of demand as we enter the winter months could put further downward pressure on residential property prices in Hamilton and the Waikato."
Shayne Donovan-Grammer, a registered valuer in Tauranga, said most of the sales in the area were in the under-$450,000 bracket with the most action in the $250,000- $350,000 price range.
According to the May report, values in the region declined by 9.4 per cent in the past year, an improvement on the 9.9 per cent annual decline in April.
Property values in Wellington declined by 7.4 per cent over the past year, an improvement on the 8.5 per cent decline reported in April.
The average sale price for the region remained relatively steady at $424,411.
QV valuer for Wellington Kerry Buckeridge said there was a shortage of listings in the region which was helping to give sale prices a lift.
This shortage could be attributed to buyers and sellers having clearer pricing expectations, resulting in listings being sold as well as uncertainty in the market, so vendors were not selling unless they had to.