Valocity head of valuations James Wilson reveals why some property values have dropped over the last quarter, plus his predictions for what’s ahead. Video / NZ Herald
The reality of a housing market pullback was reflected in new data out today which showed sales tumbled 35.2 per cent annually, monthly prices down and fewer homes sold in every New Zealand region.
Real Estate Institute figures said there were 7497 national house sales in the year to April, 2021 but only 4860 sales in the year to April, 2022.
From March to April this year, the national median sale price fell from $890,000 to $875,000 and Auckland prices were down from $1.2m to $1.1m. Queenstown suffered one of the biggest drops, from March’s $1.4m to just $950,000 based on all the sales which occurred in April.
In further signs of the adjustment now underway, sales volumes fell through all regions, particularly Marlborough down 53.6 per cent, Auckland down 41.3 per cent, Hawke’s Bay down 39 per cent and the West Coast down 38.3 per cent.
Jen Baird, REINZ chief executive, acknowledged the market change.
“We’re seeing a slowdown in activity, there is more stock staying on the market for longer and while annual price growth is more moderate, the month-on-month trend shows a fall in median prices,” she said.
New Zealand was now in a phase of the property cycle where “demand has weakened and sales counts are down, more stock is staying on the market longer and the month on month trend shows a fall in median prices,” she said.
“April residential property sales decreased annually by 35.2 per cent across New Zealand, a story reflected across all regions,” Baird said.
Falling attendance at open homes and auction rooms and a decrease in buyer inquiries are being reported across New Zealand, exacerbated by a spate of public holidays through April.
“Affordability, uncertainty and changing financial conditions remain primary concerns,” she said.
Tighter lending criteria, loan to value ratios, rising interest rates and inflation created challenges for some buyers, particularly first home buyers and investors.
Those who are backed by equity and secure in a job market with a low unemployment rate will continue to see opportunity as more stock increases choice and prices ease, she predicted.
Owner-occupiers are now the most active in the market. That meant a softening in the mid to low price range but solid interest in the mid to high bracket, she said.
The REINZ House Price Index, which measures the changing value of residential property nationally, showed an annual increase of 6.3 per cent from 3774 last April to 4013 last month, although it is down 6.2 per cent from its peak last November 2021.
Properties for sale rose 71 per cent from 15,838 last April to 27,050.
In Auckland, it takes longer to sell a house: 40 days now which is more than the 10-year average for April which is usually only 34 days. There are 23 weeks of inventory for sale in Auckland now, 14 weeks more than at the same time last year.
North Shore prices rose from a median $1.3m in March to $1.4m in April. Auckland City prices remained state at $1.3m. Manukau prices remained steady at $1.1m but Papakura fell from $930,000 to $925,000.
The trend in Auckland median prices has been strongly up in the past year but is showing recent signs of softening, with the sales count trend declining over the past nine months, REINZ said.
The days to sell median trend has been easing over the past few months. The House Price Index for Auckland had the second-worst performance of all regions over the past month, three months and 12 months.
Whangarei’s median fell from $830,000 in March to $752,000 last month.
Waikato’s median price rose from $843,000 in March to $850,000 last month but Hamilton city prices fell from $870,000 to $846,500.
Tauranga’s median fell from $1m in March to $991,000 last month, while Rotorua’s declined from $770,000 to $700,000.
Gisborne, which has had steeply rising prices in the last year, had a median price drop from $715,000 to $685,000.
Napier was one of the few areas where sales pushed up the median, from $852,000 to $900,000 in the last two months.
New Plymouth district prices fell from $705,000 to $680,000 while the Wellington region’s dropped from $937,500 to $930,000.
Christchurch remained static at a $710,000 median between March and April although the wider Canterbury region saw prices from $700,000 to $684,000.
Dunedin prices fell from $649,000 in March to $640,000 but the Queenstown Lakes district had a far bigger adjustment, from March’s $1.4m median to $950,000 last month.
Across the Otago region, the median sale price fell from $735,000 to $665,000.
On Friday, Westpac forecast prices could drop by as much as 15 per cent in the next two years.
Michael Gordon, the acting chief economist, said in Westpac Home Truths: “We’ve downgraded our house price forecast to a 15 per cent decline over two years. We correctly identified that house prices would fall as mortgage rates rose from their lows. But mortgage rates have now gone well beyond what we expected, as expectations of Official Cash Rate hikes have ramped up.”
Previously, Westpac forecast a 10 per cent price drop.
Bank economists will be reacting to this morning’s new REINZ data, issuing commentaries on the implications of the changing market.
Economists – including those at Treasury and the Reserve Bank – have been forecasting house price falls for some time based on a range of factors including record levels of new building, low immigration, tightened investor and lending regulations and rising interest rates.
Peter Thompson, Barfoot & Thompson, said last week the most Auckland house prices had fallen at any one time was around 8.5 per cent during the 1980s the sharemarket crash.
In his commentary out last week, he said the market now favoured buyers and he encouraged sellers to become more realistic.
Auckland’s average house sale price has dropped from $1.23 million to $1.21m and the median from $1.81m to $1.41m, the agency said last Tuesday.