Firm tracks value of Napier homes

Property statistics attract a lot of comment, largely because of the importance people attach to them as indicators of their homes' value, and in some ways as a measure of their household wealth.
In recent years there have been numerous statistical efforts to measure the residential property market's performance. A number of those measurements have shortcomings.
The average or median house price can be distorted simply by a greater number of higher or lower-priced houses selling in one period relative to another. That is easily exacerbated by lower sales volumes reducing the robustness of those statistics.
Over longer periods, the average house price can be over-exaggerated given that most houses added to the residential property stock - newly built homes - are of a higher standard and have a higher value level. That raises and distorts the average price. Homes that have undergone upgrading or extension work can subsequently sell for a price that not only includes the original property, but also the additional building work, further distorting average price statistics.
To account for some of those distortions within the Hawke's Bay market, local valuation firm Telfer Young tracked the value of an average house in an average Napier suburb on an annual basis.
In the analysis of value movement for a standard three-bedroom house in Tamatea shown on the graph, the period from 2007 to this year is the only time in the past 30 years where there has been a significant drop in residential property values. The drop in the value of Napier homes is interesting because many participants in the property market have never had to deal with that before.
Sellers generally fall into two categories - those who do not have to sell (they react by simply withdrawing their property from the market). They account for the relatively low numbers of sales in the past three years.
The others are those who do have to sell - they have to settle for a lower price than they would have expected before the slump.
Buyers have also found themselves in two camps. The first group, who would have been prospective buyers in the 2008-2010 period, have found themselves unable to buy because of banks' tightened lending policies.
Others with the capacity to buy have looked to maximise their position in a buyer's market by waiting until either the perfect property emerges or the opportunity arises to take advantage of a seller who has to sell.
For the rest of the year, there will be a continuation of the current property trend, where cautious buyers wait to take advantage of those who have to sell. This will keep property values subdued.
Derek Devane is a registered valuer at Telfer Young, Hawke's Bay.