Chch house prices still the strongest

Christchurch’s slowing housing market is still the strongest of the main centres, a new report suggests.

However, some parts of the country are experiencing house price falls of the sort not experienced since the global financial crisis, CoreLogic says.

The property research firm said Auckland average property values fell 1.6% month-on-month in April. Wellington’s were down 1.5% and Dunedin’s 0.7%.

Christchurch was the only main centre with any monthly price increase, lifting 0.5%.

Compared to three months earlier, Auckland’s house prices edged up slightly while Hamilton and Wellington’s were down 2%. Dunedin prices were down almost 3%, the biggest drop in more than 13 years.

Wellington’s fall was also the biggest since the global financial crisis (GFC). Its price weakness was led by Lower Hutt and Upper Hutt, down 3% and 2.6% in a month, respectively.

Nationwide, house values were down 0.8%, which CoreLogic said was the first decline recorded since the country came out of Covid lockdown in August 2020.

CoreLogic said Christchurch was the only main centre to show any real resistance from the weakening market, with values appearing to plateau rather than fall recently. Its average April property value was $761,356 – up 28.1% on the previous year, but only 1.4% up on the previous quarter and 0.5% on the previous month.

Head of research Nick Goodall said affordability was a key constraint on the market, because rising interest rates were affecting the number of people who could borrow and how much they could afford.

Anyone who was refixing their mortgages at present would see a big increase in the rate they were charged, he said.

‘‘The trajectory of the OCR forecast is what is of most interest, however, and the forecast peak of more than 3% is no doubt tempering some would-be buyers to hold off in the environment of a falling market alongside rising interest rates.’’

He said that was on top of tighter credit availability due to greater scrutiny on borrower expenses through the Credit Contracts and Consumer Finance Act (CCCFA) changes made in December, and tighter loan-to-value ratio (LVR) restrictions.

That was particularly having an effect in Dunedin, which had become the thirdmost unaffordable main centre when values were compared to incomes, and on measures of how long it took to save a deposit and the proportion of income required to service a mortgage.

‘‘Proposed changes to the CCCFA may provide some respite, and the latest data from the Reserve Bank of NZ shows banks are still staying well below (3% in March) their allowed speed limits (10%) on highLVR lending so credit flows may open up in the coming months. Debt-to-income restrictions have been pushed back, too.

‘‘Outside of interest rates there appears to be a feeling that credit availability could be lifting out of the worst of times. HighLVR lending has dropped well below the allowed speed limits and with preapprovals back on the table and anecdotes of banks more comfortable to open up again, we may see a little lift of ‘otherwise locked out buyers’, though this pool of buyers is likely to be relatively small.’’

He said investors would be relieved that the Reserve Bank had indicated debtto-income ratios were at least a year away

But he said any relaxation of lending rules was more likely to limit price falls than to lead prices to rise again.