Buyers key to market turnaround

New Zealand’s housing market downturn picked up pace over the past month, Corelogic data shows, but its head of research says there could be signs of ‘‘light at the end of the tunnel’’.

Corelogic’s latest house price index showed national average property values fell 1.8% in August, twice the pace of July.

Wellington had the fastest monthly price change, down 2.6% ahead of a drop of 2% in Auckland. There was particular weakness in Lower Hutt, down 3.2% in the month, and the central city, down 2.7%.

Wellington prices were down 7.6% over the quarter compared to a fall of 4.6% in Auckland. Central Wellington average values are now 8.2% lower than they were at the start of June.

Corelogic NZ head of research Nick Goodall said restricted, more expensive loans were dampening buyer demand. He said the downturn was now entrenched across the country. In Christchurch, where prices had been stronger, values fell 1.3% month-on-month in August, despite being 16.4% up yearon-year.

‘‘It probably is consistent with what we were expecting. The question is how long it goes and how deep. I don’t think there’s any concrete sign of [it bottoming out] yet but there are whispers of the trough not being far away in some places.’’

He said how soon things turned around would depend a lot on buyer psychology.

There were already signs of a change in buyer mindset, probably due to predictions that interest rates might not have much further to rise.

‘‘As expectations of mortgage rates nearing their expected peak become more common, housing affordability is likely to improve, which could add to an increase in property demand.’’

People might decide they would rather buy a house and face a bit more of a downturn rather than wait too long and miss out once prices rebounded, he said.