Hot housing

PHOTO: NZ’s hot housing market. GETTY

An economist has revealed the key reasons behind a price correction in New Zealand’s hot housing market, ruling the drop in Auckland’s property prices is not a crash.

The latest data from Valocity Housing Index shows Auckland’s property prices are down but only by an inch. The city’s average property value fell 0.1 percent in the first three months of 2022.

That fall is still not making much of a dent though. The average price still comes out at $1.55 million.

“That rise in building costs, along with high job security, is a key reason why this is just a price correction in the market, not a crash,” says economist Tony Alexander

The report found in the first quarter of 2022, house prices fell in a fifth of Auckland suburbs – including in Mt Roskill, where value dropped by more than $160,000.

Mt Roskill real estate agent Nick Fistonich says the drop in prices may be down to the different types of properties available in the suburb.

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“[There are] a lot of new builds, two-bedroom, three-bedroom townhouses; five six-bedroom mini-mansions, for want of a better word; then you’ve got state houses which people are adding value to – so as a median it’s really hard to determine what sits where.”

While Auckland was the only region to see a price decline over the quarter, Alexander says that is likely to change.

“It’s out to the regions where we’re we’ve seen prices rise tremendously since about 2015/2016, where the greatest possibility of a pullback exists. In particular the likes of Wellington, highly overvalued; Gisborne; and Hawkes Bay.”

Housing prices rose in the first quarter for regions outside of Auckland, but data for the month of March suggests the heat is coming out of the market.