Huge falls in house prices this year

QV’s October quarter House Price Index (HPI) shows the average value of New Zealand homes was $951,040, down from $1,063,765 in January. 

The HPI shows the average home dropped in value by 3.9% over the three months to the end of October – an improvement on the 5.4% quarterly reduction at the end of September. That figure is 5.1% lower than the same time last year and now 9.7% lower than at the start of this year.

The towns, cities, and regions hitting double-digit home value declines is growing, with Wellington (-17.6%) headlining a list of main centres that now also includes Auckland (-11.7%), Hamilton (-10.5%), Napier (-11.6%), Hastings (-11.5%), Palmerston North (-13.7%), and Dunedin (-10.4%). Queenstown-Lakes was the only region to buck the trend, with the average value increasing by 2.9% over the quarter.

QV chief operating officer David Nagel says the traditional spring upswing in the residential property market hasn’t amounted to much more than a small speed bump, with few pockets of true home value growth, and only a relatively small decline in the market’s downward trajectory these past two months in a row.

“We have seen a seasonal surge in the number of properties coming on to the market, as spring is often seen as a good time to sell. This has kept downward pressure on prices, especially as interest rates have also risen and are expected to climb further to stifle high inflation.”

Across the Auckland region, the average value now sits at $1,348,213, falling 4.4% in the October quarter, which is a slight improvement on the 5.8% rate of negative home value growth in the previous three-month period. All bar one of the Super

City’s seven former territorial authorities are now showing negative home value growth annually, with five out of seven also showing double-digit declines for the year.

This year couldn’t be more different to the last one. At the same time last year, the HPI was showing an average home value increase of 22.2% throughout the first 10 months– now it’s showing an average decline of 9.7% over the same period. “I can’t think of two more starkly contrasting consecutive years in my long career as a registered property valuer,” says Nagel.

Though the average rate of decline has slowed in recent months, and it may even continue to slow as summer approaches, increasing volumes of listings are giving buyers plenty of choice and the upper hand when it comes time to negotiate – and with interest rates rising, no-one is going to willingly service a larger mortgage than they have to, he says. “This will likely continue to have a dampening effect on the market for a good while yet.”