Nationwide residential property values have risen again in July, according to the latest Quotable Value index, but investors are looking for properties that offer good yields, rather than banking on continuing capital gains.
QV said nationwide values were up 2.2% over the past three months, 4.6% up over the past year, and are now only 0.8% below the previous market peak of late 2007.
In inflation adjusted terms values are 13.1% below peak.
Jonno Ingerson, QV research director said: "The relatively strong increase in nationwide values can be attributed primarily to an increase in the main centres, particularly Auckland and Christchurch. There are initial hints in this latest data that values may be levelling in Tauranga and Dunedin after increasing for the past few months, while values in Wellington remain flat.”
He said there was a lack of listings in most of the main centres and less choice for buyers.
"In Auckland this has led to a sellers' market with prices pushing upwards, while Wellington is showing the first signs of heading that way too."
Ingerson said first-home buyers had been spurred into the market by low interest rates, which were also appealing to property investors.
"This is starting to encourage property investors and small developers back into the market, although investors are now careful to ensure their purchases return a decent yield rather than relying on capital gain. There has also been an increase in activity in the middle to upper range of the market which can possibly be attributed to people coming back into the market after having held off for several years.
QV said values in the wider Auckland area were up 6.3% over the past year, with the pace of the increase picking up since April. In the last three months values have increased 3.1%.
Values have increased the most in old Auckland city, up 7.1% over the past year, and up 3.2% over the past three months. North Shore, Waitakere and Manukau rose 6.2%, 5.9% and 6.0% over the past year respectively.
Values in the wider Auckland area are now 5.6% above the 2007 market peak, with the old Auckland City leading at 8.4% above. When inflation is taken into account old Auckland city values remain 5.2% below the peak.
QV Valuer Jan O'Donohue said: "Auckland continues to be a sellers' market with limited listings in most areas. The market has changed in the North Shore over the past couple of months with buyers now acting with more confidence and a sense of almost certainty that the market was heading upwards. This is leading to increased competition and prices are edging up accordingly. Prices are also rising south of the Harbour Bridge with Avondale, Blockhouse Bay, Mt Roskill, Pakuranga and Howick popular. Many vendors are also opting to sell by auction, with the auction dates being brought forward when interest is high."
She said first-home buyers were struggling to match property investors and small developers.
Values in Hamilton have risen 1.7% over the past three months, and are now 3.5% higher than the same time last year. In Tauranga values have been flat for most of the past year, with most of the 1.6% increase over that time occurring in the last three months. QV said those rises might be short-lived as the latest month shows values flattening again. Values in both Hamilton and Tauranga remain well below the 2007 market peak, by 9.1% and 10.3% respectively.
Values in the Wellington area have increased by 2.1% over the past year, although almost all of that increase took place in the second half of 2011 with the last three months showing no change. Values in the Wellington area are currently 5.7% below the previous market peak.
Values in Christchurch have risen 5.8% over the past year and 2.1% over the past three months to now sit 1.9% above the previous market peak of late 2007.
The Waimakariri and Selwyn Districts continue to increase in value faster than anywhere else in the country, with both now well above the previous market peak. Waimakariri is up 13.9% over the past year and 13.0% above the 2007 peak, while Selwyn is up 13.0% over the past year and is 12.9% above peak.
QV Valuer Daryl Taggart said: “Having come a long way over the past year, Christchurch experienced another vibrant month in July. There is a strong interest in well-priced properties in suburban Christchurch with Selwyn and Waimakariri continuing to lead the way as demand grows. A shortage of listings does continue however, with investors and developers entering the market spurred by increased returns."
Values in Dunedin have increased 1.2% in the past three months after dropping slightly at the start of the year. Values are now 3.8% up on the same time last year and 4.0% below the 2007 peak.
QV Valuer Tim Gibson said: "Values are being driven by an undersupply of listings, whilst good locality and presentation are key to properties getting snapped up. The majority of buyers are owner-occupiers although there is still evidence of some investors in the market."
Values in most of the provincial centres have been relatively stable for the past year, with values lying within a 1.5% band. The exceptions are Napier (down 1.7%), Palmerston North (up 2.2%) and Nelson (up 1.9%) although all three have flattened in recent months. Gisborne has dropped 4.2% over the past year and is now more than 25% below peak.