Property market in decline
Nationwide prices now 5.4 per cent ($55,000) lower than a year ago
New Zealand’s house prices are finishing 2022 on a grim note, with rising interest rates, cost of living pressures and warnings of a recession expected to inhibit the market well into next year.
The nationwide average property value continued its downwards trajectory, dropping 3.8 per cent ($39,000) to $1.001 million in three months to the end of November, new OneRoof figures show.
Weakening values and a drop-off in sales activity mean homeowners who bought at the height of market face on paper losses of as much $225,000 in some cases. Nationwide, prices are now 5.4 per cent ($55,000) lower than they were a year ago.
Residential real estate in Greater Wellington has borne the brunt of the market downturn. The region’s average property value dropped 16.7 per cent ($184,000) in the last 12 months to $917,000, with house price inflation dropping 8 per cent ($80,000) in the last three months alone.
Auckland has suffered the next biggest annual decline, with average property values falling 8.8 per cent
($133,000) year-on-year to $1.384m.
The downturn has wiped out more than 40 per cent of the value gains Auckland homeowners made since the country came out of the first Covid lockdown, with the city’s average property value tumbling 12.4 per cent ($195,989) since market peak in January.
In Greater Wellington, the average property has fallen 19.69 per cent ($224,818) since peaking at $1.14m in March, with the slump eating 65 per cent of value gains made post-Covid.
Four more regions recorded year
on year declines: Hawke’s Bay average property dropped 6.2 per cent ($55,000) to $826,000; ManawatuWhanganui’s dropped 6.1 per cent ($41,000) to $632,000; Nelson’s fell 3.9 per cent ($34,000) to $837,000; and Bay of Plenty’s slid 2.3 per cent ($24,000) to $1.001m.
James Wilson, head of valuations at Valocity, OneRoof’s data partner, said while property values across the rest of country were still ahead of where they were a year ago, only three regions saw values grow in the last three months.
“Southland’s average property
value rebounded from a 1 per cent drop in the three months to the end of October to growth of 0.6 per cent in the three months to the end of November. There was a similar turnaround in fortunes for Gisborne, where the average property value went from a 1.3 per cent drop to a 0.8 per cent rise over the same period.
“Quarterly growth in West Coast, the country’s cheapest housing market, was a stronger 4.5 per cent ($18,000), pushing the region’s average property to $421,000. The region has yet to show signs of fatigue, but again a low sales environment may be masking weaknesses in the market.”
Of the country’s 72 territorial local authorities (TAs), 16 saw value growth in the three months to the end of November, with Opotiki, in Bay of Plenty, continuing its hot run with a 9.4 per cent lift in its average property value, now at $676,000.
Also recording strong value growth were Hurunui, in Canterbury (up 7.5 per cent to $717,000); Otorohanga, in Waikato (up 7 per cent to $718,000) and Grey, in West Coast (up 6.6 per cent to $422,000).
Property values in most TAs are higher than they were a year ago but the margins are getting smaller, with just nine recording double-digit growth. The biggest year-on-year average property value lift was in Wairoa, in Hawke’s Bay (up 15.8 per cent to $470,000) while the biggest drop was in Lower Hutt (down 20 per cent to $814,000).
Seven other TAs saw year-on-year value declines of 10 per cent or more, including Upper Hutt (down 18.4 per cent to $819,000); Wellington city (down 17.9 per cent to $1.037m) and Auckland’s North Shore (down 10.2 per cent to $1.513m).
Queenstown is the country’s strongest performing, and most expensive, major metro, but it too is starting to be weighed down. The average property value jumped 13 per cent ($218,000) in the last 12 months to $1.892m but growth in the last quarter was just 1 per cent.
Christchurch has also cooled, with prices now only 3 per cent above what they were in December, and 4.36 per cent below market peak.
Property values are down 6.8 per cent year-on-year in Dunedin and down 5.7 per cent and 5.5 per cent year on year in Hamilton and Tauranga respectively.