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Bayleys Research


PALMERSTON NORTH RESIDENTIAL REPORT 2008

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Market Overveiw

Palmerston North is the twelfth largest city in New Zealand (by population) and is home to 75,543 people according to Statistics New Zealand (StatsNZ) Census data 2006. The population increased by 4.9% between 2001 and 2006 whilst occupied dwellings increased accordingly by 5.4%.

Palmerston North City’s residential market has shown strong value growth over the last five years according to the latest figures released by the Real Estate Institute of New Zealand (REINZ). Between the December 2002 and the December 2007 quarter, the median price has more than doubled from $140,000 to $293,000, a growth rate of 109%. In the year to December 2007, values increased by 13% which is more than double the growth rate of the national median at 6% for the same period. The provisional REINZ figures for the first quarter of 2008 indicate a softening of median values in line with most regions.

There is an overall weakening of the New Zealand residential dwelling sales volume which is not surprising given the high interest rate environment that is currently prevalent. In Palmerston North, sales volumes have fluctuated over the last six years within a tight band averaging 493 transactions per quarter. The December 2007 quarter fell short of this average with 477 transactions, however this was a gradual recovery from the June 2007 quarter which recorded the lowest volume of transactions in the past 5 years with 409 transactions.

One of the key indicators of market activity is the average days on market figure which in the year to December 2007 has continuously risen to reach the highest days on market recorded in the past 5 years of 54 days. The graph in the next column illustrates that as the rate of value growth has eased through 2007, purchasers began taking more time over purchasing decisions as represented by a continued rise in the length of time to sell a property. The December 2007 figure is double the lowest days on market figure of 26 days recorded in December 2005.

The easing values, the lower volumes and longer days on the market are possibly an insight into the 2008 market conditions where we will see values flatten and possibly drop in some areas

Anecdotal evidence from the market so far this year suggests that a number of vendors are dropping their asking prices in order to achieve sales.

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