NZ Property Market

PHOTO: NZ Property Market. FILE

Property values are tumbling across the country, with house prices in most of New Zealand’s major cities suffering sharp falls.

The latest figures from the OneRoof-Valocity House Value Index show steep declines in Auckland, Dunedin, Hamilton, Tauranga and Wellington.

Nationwide, the average property value slid 0.9% ($10,000) to $1.087 million, as rising interest rates, cost of living pressures and tighter credit conditions kept buyers out of the market.

Auckland’s average property value fell 2.2% ($34,000) in the three months to the end of May to $1.53m – the city’s third consecutive quarter-on-quarter decline.

Greater Wellington fell harder over the same period. The 2.9% drop in the region’s average property value, to $1.104m, pushed house prices back to November levels.

Four other regions – Manawatu-Whanganui, Hawke’s Bay, Nelson and Waikato – suffered declines in their average property value over the last three months but homeowners across the rest of the country saw little in the way of value growth.

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The country’s best-performing region was Canterbury, but quarterly growth of 1.9% was well below the 2.9% it recorded in the three months to the end of April and the 3.2% recorded in the three months to the end of March.

The slowdown was also evident in Northland, which had been, for much of this year, the country’s strongest housing market. Value growth in the region dropped from 5.8% in the three months to the end of April to 1.4% in the three months to the end of May.

Of New Zealand’s seven major metros, just two – Christchurch and Queenstown – recorded value growth over the quarter. Hamilton suffered the steepest decline, with its average property value falling 4.1% ($38,000) to just below $900,000 in the three months to the end of May.

house prices

Widespread fall in NZ house prices | CoreLogic

All but two of the city’s suburbs with 20 or more settled sales in the last 12 months suffered value drops. More worrying is the fact that house prices in three Hamilton suburbs – Flagstaff, Rototuna North, Hamilton East – are now below November levels.

Dunedin’s average property value didn’t fall as hard – it was down 2.5% ($19,000) to $738,000 – but the figures showed no suburb there with 20 or more settled sales in the last 12 months recorded value growth in last three months, putting recent purchases at risk of falling into negative equity.

The capital’s average property value fell 2.4% ($32,000) to $1.288m, with prices in 26 of the city’s suburbs lower now than they were three months ago. Tauranga’s average property dipped 0.2% ($2000) over the quarter to $1.237m, with 10 of the city’s suburbs suffering negative growth over the period.

Mount Victoria, in Wellington

Valocity head valuations James Wilson says it’s important to put the declines in context. Photo / Fiona Goodall

Twenty-eight of the country’s 72 territorial local authorities suffered value declines over the quarter, with the biggest drops in Kaikoura and Upper Hutt – the average property value in both fell 6%. Eleven TAs were also worse off now than they were six months ago, although New Zealand’s average property value is still up 13.8% on this time last year and almost 40% up on June 2020.

James Wilson, head of valuations at OneRoof’s data partner, Valocity, said: “Weaker market conditions are now evident across much of the country and across many property types. FOMO is most definitely gone, replaced by FOOP – fear of overpaying.

Nelson house prices

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“Interest rates again are playing a key role in value movements. The cut to interest rates and removal of credit barriers drove a lot of house price growth in the months after the first Covid lockdown. Now rising interest rates and a credit squeeze have pushed values the other way.

“What’s clear now, though, is the growing influence of interest rates on the market, with credit rules less of a factor in people’s buying decisions. Throughout the summer period buyers were frustrated by how much they were allowed to borrow as a result of the CCCFA, but they are now more likely to be worried about their ability to pay back their debt on higher interest rates. It’s likely, in this environment, that the flagged reversal on the CCCFA changes will have a much lower impact on buying activity.”

Wilson said it was important to put the value declines in context. “Many of the areas in trouble now experienced significant growth over the past 12 to 18 months, and even with prices falling are likely to be still well ahead of where they were two years ago.”

Of the 984 suburbs and towns that registered 20 or more sales in the last 12 months, 488 suffered declines in their average property value, with total lost over the last three months coming in at $15.5m. The biggest drop was in Chatswood, in Auckland’s North Shore. The suburb’s average property value fell 8.1% ($153,000) to $1.725m over the quarter and 2.65% over the last six months.

House prices in a further 123 suburbs were below November levels, while house prices in four suburbs – Auckland Central, Meremere, Oriental Bay, Newmarket – were cheaper now than they were 12 months ago.

OneRoof editor Owen Vaughan said the figures pointed to further declines. “The biggest concern for those who bought at market peak is whether or not their property is worth less than what they paid for it,” he said.