House price fall hits new record

Rising interest rates are causing buyers to hang back from the property market even though there are now almost 75% more properties to choose from than the same time last year, the Real Estate Institute (REINZ) says.

It has released its data for October, which shows a 1.9% increase in the national median price compared to September, but a 7.5% decrease year-on-year. The median national price in the month was $825,000.

The institute’s House Price Index (HPI), which measures the changing value of residential property nationwide, showed an annual decrease of 10.9% – down 12.4% from its peak in November 2021.

Kiwibank economists said that was the biggest fall recorded in the institute’s data since its records began in the early 1990s. ‘‘House prices don’t appear to have hit the bottom yet.’’

Sales activity dropped 34.7% compared to the year before. The number of properties available for sale was up 74.7%.

Auckland’s median price decreased 12.7% compared to October last year, from $1.249 million to $1.09m.

The region has recorded six consecutive months of annual median price decreases for the first time since the period of August 2008 to January 2009.

In Wellington, the median price was down 17.2% annually, from $1m to $828,000 in October 2022.

Real Estate Institute chief executive Jen Baird noted that the year-on-year comparison included the period last year when Auckland came out of lockdown restrictions.

‘‘In October 2021, increased optimism over the easing of lockdown restrictions in Auckland combined with a delay to the introduction of changes to the Credit Contracts and Consumer Finance Act (CCCFA) from October to December impacted market activity,’’ she said.

‘‘Able to transact and keen to move before tougher lending restrictions were implemented, people come to market hard and fast, contributing to a sense of urgency that is reflected in REINZ property data for October last year and is apparent in our annual comparisons.’’

But she said there were other factors affecting the market this year.

Rising interest rates, the higher cost of living, tax legislation and property regulation as well as tightened lending criteria had slowed buyer activity.

‘‘In September, the data showed the usual spring uplift was subdued – the story remains similar through October. Nationally, sales activity is down 34.7% yearon-year and 4.3% month-on-month.

‘‘Properties continue to change hands, and people continue to make life decisions. However, buyers and vendors are acting with caution, weighing up their options.’’

She said there were signs that first-home buyers were ‘‘dipping their toes in’’, to take advantage of more properties being on the market and banks lending again.

‘‘While this is positive news, further increases in interest rates are putting a damper on buying plans in this buyer group. Meanwhile, reports from salespeople across Aotearoa suggest investors continue to step back,’’ she said.

The Kiwibank economists said the price falls would be deeper if the labour market were not so strong.

Nationally, the median number of days to sell a property in October was 44 – up 10 days compared to October 2021 and new listings were down 4% annually. New Zealand, excluding Auckland, had an annual increase of 3.3%.