Housing market downturn
North Canterbury housing prices are bucking national trend
House price rises in the Waimakariri district are continuing to slow, but have not softened to the same extent as most other regions of New Zealand, new Quotable Values (QV) figures show.
Across Canterbury, values were still up 1.6% in the three months to the end of April, down from the 2.4% reported by QV last month, but still considerably higher than the national average of -2.2%.
The region’s annual rate of home value growth is 28.4% – more than twice the national average of 14%.
The Waimakariri district posted capital gains of 1.7% this quarter, down from 2.9% reported by QV last month.
Nationally, the average house price has dropped 2.2% over the three months to the end of April.
That fall followed a 0.6% quarterly decrease last month, and left the national average at $1.04 million.
It was still up by 14% on March last year, but the annual increase rate was down from 18.3% last month.
All but five of the 16 regions monitored by QV had quarterly price declines, with Palmerston North recording the biggest at 5.4%, which left its average price at $733,791 in April.
Wellington was next in line with a fall of 3.6% which took its average to $1.05m, while Dunedin and Hastings each had a 3.4% drop to averages of $698,673 and $897,507 respectively.
In the Auckland region, prices fell 3.1% over the quarter to an average of $1.49m. The region’s annual increase rate dropped to 14.2% from 18.6% in March.
Christchurch was one of the areas where prices did not drop over the quarter. It had an increase of 0.9%, which put its average price at $801,614.
‘‘The slowed pace in growth for Christchurch is a reflection of more properties on the market with sales activity down,’’ local QV property consultant Olivia Brownie said. ‘‘Prices appear to be holding despite the change in market dynamics.’’
The further increase in the official cash rate, which was affecting borrowing power, and more stock becoming available would be ‘‘key factors influencing reduced growth over the coming months’’, she said.
Marlborough, Queenstown Lakes and Invercargill also all had quarterly price increases. Their prices were up 3.4%, 3.2% and 1.1% respectively.
Queenstown was the only area to have a month-on-month price increase. It now has the most expensive average price in the country, at $1.64m.
QV general manager David Nagel said it was no surprise the largest declines were in places that experienced the strongest growth over recent years.
Those markets were the first to become overheated and that made them more susceptible to a value correction as rising interest rates, tightening credit and affordability concerns started to kick in, he said.
‘‘Falling attendances at open homes and declining auction clearance rates have been well publicised, and demonstrates a swing in the balance of power between vendors and purchasers.
‘‘A big part of the three-month value reductions occurred in late March and April, so we expect a gradual escalation of price declines in the coming months as vendors wanting to sell their properties are forced to meet the market.’’
Last week Westpac’s economists downgraded their house price forecast to a 15% fall over the next two years. But while that drop seemed large compared to recent history, it would only take average prices back to where they were at the start of 2021, they said.