House values continue to slide

There was little New Year cheer for homeowners as house values continued to slide in the Western Bay region and nationally.
The stagnant residential property market, now featuring an oversupply of houses for sale, has placed pressure on prices.
During the three-month period ending December, values fell 2.5 per cent below a year ago in Tauranga city and a steeper 3.2 per cent in the Western Bay district, according to the latest figures from QV Valuations.
The falls were 0.9 per cent in Tauranga and 1.1 per cent in Western Bay, including Katikati, Omokoroa and Te Puke, for three months ending November.
Values in Tauranga were also 2.5 per cent behind at the end of October. The average sale price in Tauranga slipped from $409,100 in November to $406,482 last month, but the average increased to $406,321 in Western Bay from $383,377.
Shayne Donovan-Grammer, a valuer in QV's Tauranga office, said many people were on tight budgets and there wasn't a lot of focus on property - "it's not where their minds lie".
He said the market was pretty quiet for this time of the year and he couldn't see much improvement in activity.
Donovan-Grammer said the Tauranga market was driven by capital gains and this wasn't happening at present.
"If you don't see any capital gain for another two to three years then why buy into the market now - you can get the same price in three years' time. It's cheaper to rent than to buy at the moment."
He said people who bought in the boom years 03-07, with a low deposit and high borrowings, were feeling it.
"Some don't have the equity to move on because their houses are worth less than the loan they took on. The fact that interest rates are low is a positive," he said.
Nationally, residential property values were 0.9 per cent below a year ago and 5.8 per cent below the market peak in 2007.
Values in the Auckland area ended the year 0.6 per cent ahead, Wellington was 2.2 per cent behind, Hamilton was 2.7 per cent adrift, and Rotorua 0.8 per cent below a year ago.
Jonno Ingerson, QV.co.nz research director, said consumer confidence was a key driver of the market and that would need to improve before a return to some form of normality. He expected the oversupply of houses would continue for half the year.
"At some stage in the next year or two, the lack of building activity over the last couple of years, combined with a steadily increasing population, is likely to lead to increase demand for housing and therefore a stabilisation and subsequent increase in values."