Steep slump in Wellington property prices

House prices have fallen by over 10% since the start of the year in seven centres, and Wellington’s fall is its biggest in two decades, Quotable Value (QV) says.

The Wellington region’s average price dropped by 17.6% this year to $894,913 in October, the property company’s latest house price index showed.

That was the region’s steepest fall from January to October in 20 years, and it was also the biggest fall anywhere, over that 10-month period, in the last 10 years.

Previously, the region’s steepest fall from January to October was in 2008 when prices dropped by 8.7%.

Within the region, Lower Hutt and Upper Hutt had the biggest quarterly price declines at 8.8% and 7.6% respectively, but the region’s quarterly decline was 6.8%, an improvement on 9.6% last month.

Wellington senior QV consultant David Cornford said further price declines were expected as interest rates continued to rise.

There was plenty of stock on the market, and it was unlikely the level would decrease anytime soon, which meant supply would outstrip demand for some time, he said.

While Wellington’s price decline was the steepest, Palmerston North’s were down 13.7% and Auckland’s 11.7%.

Queenstown was the only area to buck the trend, with prices up 4.9% since January. It now had an average of $1.70m.

QV chief operating officer David Nagel said the market’s traditional spring upswing had not amounted to much more than a small speed bump, although there had been a seasonal surge in listings.

That had kept downward pressure on prices, especially as interest rates had also risen, and were expected to climb further to stifle high inflation, he said.

Economists expect prices to keep falling, and ANZ and Core-Logic both now picked an 18% decline from their 2021 peak. Adjusted for inflation, that was a drop of almost 27%.

That was a significant drop, but prices rose by an estimated 45% over the course of the pandemic, and most homeowners would still be sitting on capital gains generated over the boom.