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House Values Continue To Grow

Media release
27 May 2004

House Values Continue To Grow

New Zealand house prices have now increased for 11 consecutive quarters, provisional figures for the quarter ending March 2004 released by Quotable Value (QV) today reveal.

The overall NZ QV House Price Index (QV HPI) shows an increase of 22% for the year ending March 2004. This annual growth compares favourably with the substantial growth of nearly 24% for the year ended December 2003, says Blue Hancock of QV Valuations.

Only Upper Hutt City and Papakura’s House Price Index increased more than last quarter. All other areas showed a slower rate of increase, indicating some moderation is returning to the market, said Mr. Hancock. The national median sale price for the quarter was $225,000.

“The House Price Index is a better indicator of change in property values, as median sales prices can be impacted by sales activity in specific property types,”, Mr. Hancock said.

Areas to achieve annual growth rates in excess of 20% for the year ended March 2004 include Invercargill 34.9%, Napier 31%, Christchurch 30.7%, Dunedin 29.6%, Tauranga 27.9%, Nelson 26.5%, and Waitakere 23.1%.

Although Auckland City shows an annual growth of 19%, this figure is not final, as unfortunately not all sales have been received for Auckland City for the March 2004 quarter.

“The highest quarterly growth of 6.1% was recorded in Papakura, which indicates a ‘ripple effect’ in Auckland’s house price growth,” Mr Hancock said. “The ‘ripple effect’ is the impact of strong house price growth reaching the outer suburbs of a city as many investors and first home buyers compete to purchase the cheaper properties available in those locations compared to other parts of the city.”

This is also demonstrated by the higher value quarterly growth in Porirua (4.1%) and Lower Hutt City (3.5%), when compared with Wellington City (2.6%).
The next quarter is expected to still show increases in house values but with the rate of increase beginning to reduce, Mr Hancock said.

“Important factors like the continued downward trend in net migration, and decreasing affordability due to high house price-to-income ratios could continue to reduce buyer demand in the short term.”


Quotable Value believes the following information may be useful to your business and property journalists. It contains commonly asked questions about the Quarterly House Price Index and their answers:

1. What is the Quarterly House Price Index (QHPI)?

The Quarterly House Price Index (QHPI) is an index used to measure the movement in house prices over time. The index takes into account the ‘Average Sale Price’ in relation to the ‘Average Capital Value’ of properties sold, as well as the volume of sales within that area. This index is only aggregated and published for areas where there are sufficient sales to provide confidence in the output.

2. Why does Quotable Value recommend using the QHPI?

Quotable Value (QV) recommends using this index when commenting on sales trends, because it reduces the impact of extra-ordinary circumstances and low volume of sales, thereby providing a more robust indication of market house price trends.

There is a weakness in using average sales prices as a measure of value in the property market. Average and Median Sales Price can be a poor indicator when the sales volumes are low and particularly when the sales prices vary significantly. With a low sales volume, a few sales of very high price properties can significantly impact the “average” price. Also, with activity in particular sectors of the market (lower value apartments and investment properties), the Median price can be significantly impacted.

QV recommends the reporting of index movement rather than average sales prices.

3. How is the QHPI calculated?

- Freehold open market sales are included.
- The price to value ratio for each sale using net sale price and the rating valuation are calculated.
- The price to value (p/v) ratios for the Territorial Authority are summed and divided by the number of sales to calculate the average p/v ratio.
- The percentage change between the current average p/v ratio and the previous period’s average p/v ratio are calculated.
- This percentage change is used to calculate the current period’s index for the Territorial Authority.

4. When did the QHPI begin?

The QHPI was re-based in September 1989, effectively meaning the index begins in that period. However, QV are able to produce statistics using its database going back in some areas to 1985.

5. We were expecting more sales in the area for the quarter because of the

perception of a buoyant market – why would there be less sales than anticipated?
Some sales may not have been notified to the Territorial Authority in time for inclusion in the QHPI. Notification of the sale to the Territorial Authority does not occur until after the sale has been settled and documents forwarded by the solicitor. This, generally, introduces a lag of 4 to 6 weeks before the Territorial Authority records the sale.

6. Why is the latest quarter always shown as “Provisional Data”?

QV provides the QHPI 6 weeks after the end of the quarter. However, due to the lag between the Sales and Purchase Agreement being signed, the sale being settled and the Territorial Authority being advised, there will still be sales for the past quarter that are not yet included in the statistics. The current quarter’s statistics are considered ‘provisional’ as they provide a good indication of market activity but do not provide full sales details.

The finalised index figures are provided in the following quarter’s report.

7. How is a Territorial Authority’s Suburbs defined and named?

Each Territorial Authority concerned defines its boundaries. The suburb boundaries are, however, based on Sales groups, which are internally defined by QV.

8. Why are some Territorial Authorities missing in the QHPI?

Statistics for some Territorial Authorities will be missing from the published QHPI because QV has decided not to publish them because it believes there are not enough sales occurring within the quarter to produce a statistically reliable sales trend for the Territorial Authority area.

9. Where does QV get its data?

QV maintains a national database on Property Information that it creates by sourcing updates of the District Valuation Roll from Territorial Authorities.


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