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The housing market decline has accelerated and spread to every region across the country, with one exception.
New Zealand's average property value dropped 3.7% in the last three months to $1.043 million, as sales activity collapsed to pre-Covid levels.
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Figures from the latest OneRoof Valocity House Value Index show drops in 15 of the country 16 regions, with significant weaknesses apparent in Wellington and Auckland.
Only West Coast, New Zealand's cheapest housing market, managed to escape the downturn, with its average property value up 2.5% ($10,000) over the quarter to $403,000.
Suffering the country's biggest headache was Greater Wellington. The region's average property value plunged 9.1% over the quarter, ending its 15-month spell in the $1m club.
Greater Wellington was also the only region to be down year on year, but it won't be long before other regions follow suit.
Nelson's average property value suffered the next biggest quarterly drop after Greater Wellington, at 5.9%, followed by Hawke's Bay (down 5.2%) and Bay of Plenty (down 4.4%).
Auckland’s average property value was down 4.3% over the three months to the end of August - its sixth successive quarterly decline since the end of March - and is up just 2.3% year on year.
James Wilson, head of valuations at Valocity, OneRoof's data partner, said: "Almost half of the value gains made in the last 12 months have been wiped out by the slump, with the nationwide average property value down 5% - $55,000 - since peaking in February.
"Wellington’s newest homeowners are looking particularly vulnerable. For the second month in a row, house values in the region were down year on year, with the 5.6% drop recorded in the 12 months to the end of August the region's biggest year-on-year decline since.
"Worse still, the last six months have wiped out more than 40% of the $350,000 value gains Wellingtonians made during the post-Covid boom. Those who bought around market peak with a minimum deposit may now find themselves in negative equity, and run the risk of incurring real losses if forced to sell in the current market environment."
Wilson said hesitancy among buyers, driven by rising interest rates, an inflation rate of more than 7% and fears about the wider economy, was resulting in fewer sales, which in turn was putting downwards pressure on property values.
The number of settled sales in the last quarter was 13% down on the quarter prior and 31% down on the same quarter last year. "More telling is the fact that sales were 24% down on the same quarter five years ago," Wilson said. "Auckland, which accounts for the bulk of sales activity in the country, recorded almost 8% fewer sales last quarter than it did during the same three-month [period] in 2017, when the city's housing market was in the midst of a slump."
Of the country's seven major metros, only one, Queenstown-Lakes, avoided the winter chill. Its average property value grew 1.8% ($33,000) in the last three months to $1.878m.
The capital’s average property value dropped 11% ($151,000) over the quarter to $1.137m, and is down 6.3% ($76,000) year on year. The value decline in Tauranga over the quarter was 5.6%, and just over 4% in Dunedin. House values in Hamilton and Christchurch dropped 2% and 1.1% respectively.
Wilson said: "Fifty eight out of 72 territorial local authorities were in negative growth territory over the quarter and property values in five were down year on year. Properties in Lower and Upper Hutt, Porirua, Wellington and Palmerston North are worth less now than what they were a year ago."
Wayne Shum, head of research at Valocity, said that the volume of mortgage registrations was falling fast.
The total number of new mortgages registrations - including first-home buyers, investors and movers - had dropped from 26,000 in the three months to the end of June to 21,000 in the three months to the end of July.
"Some 7600, or 38.5%, of all new mortgages issued between May and July this year were to first-home buyers, compared with 7800, or 36.9%, in the previous three-month period.
"It's a big drop from the 10,500 mortgages registered to first-home buyers 12 months ago, when the buyer group represented 39.9% of all new mortgages."
Nationwide, movers made up 16.5% of new mortgage registrations in the three months to the end of July, while investors made up 25.6%, and those re-entering the market made up 2.9%.
Shum said the decline was in line with declining sales and rising interest rates. "Before we entered the Delta lockdown the market was still pumping. It wasn't until the whole Delta lockdown was hanging around that people started having doubts, especially in Auckland."
Valocity head of valuations James Wilson: "Wellington’s newest homeowners are looking particularly vulnerable." Photo / Fiona Goodall
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KEY POINTS: The biggest winners, biggest losers
At $1.043 million, New Zealand’s average property value is 4.7% ($47,000) ahead of where it was this time last year, but the downturn is eating away at the gains made late last year and early this year, with $40,000 lost in the last quarter alone. A continued decline at current pace could see it drop below the magic $1m mark before the end of this year.
Just one region registered growth in the three months to the end of August - West Coast (up 2.5%, to $403,000). That’s quite a turnaround from six months ago when no region was in the red, and only Auckland was on the cusp of negative growth. The region taking the biggest knock was Wellington. Its average property value dropped 9.1% ($99,000) over the quarter to $992,000 - the first time it has been below $1m since May 2021.
Of the country’s 72 territorial local authorities, 14 saw value growth over the three months to the end of August. Most of those were in West Coast and Otago, but Kaikoura, in Canterbury, and Waikato district, in Waikato, were at the top of the rankings for the second month in a row, recording growth of 13.2% and 7.3% respectively. The capital was at the bottom of the heap, with its average property value down 11.7% ($151,000) over the quarter. Two other TAs also suffered double-digit declines - Hauraki and Otorohanga, both in Waikato district.
Nationwide sales volumes tumbled from 98,450 in the 12 months to the end of July to 95,455 in the 12 months to the end of August. Of the 2605 suburbs covered in the figures, 936 recorded 20 or more settled sales over 12-month period, while 597 had one or none.
The figures cited below only cover suburbs with 20-plus settled sales in the last 12 months.
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NZ’S MOST EXPENSIVE
With an average property value of $3.9m, Herne Bay is New Zealand’s most expensive residential suburb, but the downturn has made houses there less expensive. The wealthy enclave has in the last three months lost its status as NZ’s $4m suburb, with its average property value dropping 5.7% ($236,000) over the quarter, and 6.91% ($290,000) in the last six months. Year on year growth for the suburb was 4.4%, so those who bought last September have still come out $164,000 ahead.
The most expensive suburb outside of Auckland is Queenstown-Lakes' Kelvin Heights (down 2.2% over the quarter to $2.6m).
Forty-seven suburbs with 20 or more settled sales in the last 12 months have an average property value of $2m and above - down from 53 three months ago. Of the current crop of $2m-plus suburbs, just four saw value growth over the quarter, and only eight are in a better position now than they were six months ago. Values in six $2m-plus suburbs - all of which are in Auckland - are down year on year.
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NZS CHEAPEST
Runanga, in Grey, retains its crown as New Zealand's cheapest place to buy, with the town's average property value sitting at $233,000. Value growth over the quarter was 1.7%, adding another $4000 to the price of a typical home there. While the property boom hasn’t added hundreds of thousands of dollars to the value of Runanga homes, residents who bought in the town post-lockdown, when the average property value was $165,000, are sitting on a tidy $68,000 gain. Just four other towns and suburbs have an average property value of less than $300,000: Mataura, in Gore ($242,000); Cobden, in Grey ($252,000); Blaketown, also in Grey ($270,000) and Kaitangata, in Clutha ($286,000).
Of the 71 suburbs with an average property value of less than $500,000, 49 experienced value declines over the quarter. The downturn has also widened the pool of “cheap” suburbs in the country’s most expensive city, with the number of Auckland suburbs with an average property value of less than $1m up from 17 six months ago to 24 now.
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IN DEMAND
Kaikoura Flat, in Kaikoura, Canterbury, recorded the strongest growth over the quarter, with the suburb’s average property value up 11.7% to $870,000. Growth was also strong in Meremere and Pukekawa, both in Waikato district, but the overall number of growth suburbs dropped from 223 in the three months to the end of July to 157 in the three months to the end of July.
Outside of Queenstown-Lakes and Christchurch, heat in the major metros is becoming harder to find. No suburb in Dunedin, Tauranga or Wellington recorded value growth over the quarter, while the number of growth suburbs in Auckland and Hamilton was three and one respectively.
Lake Hayes, in Queenstown-Lakes, enjoyed the biggest dollar gain over the quarter, with its average property value rising $147,000 to $2.48m.
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FALLING FAST
Northland, in Wellington, is the housing market’s weakest link. The suburb’s average property value fell 15% ($220,000) to $1.24m in the three months to the end of August, and is down 5.6% year on year. Another 64 suburbs, mostly in Greater Wellington, saw double-digit declines over the quarter, up from 52 in the three months to the end of July. The suburb that lost the most dollars was Totara Park, in Auckland's Manukau district, with its average property value dropping $299,000 over the quarter to $2.47m. All up 768 suburbs lost a combined $44m over the three-month period, with values drops of $100,000-plus recorded in 131 suburbs.
The average property value in 158 suburbs is lower now than what it was a year ago, with Roseneath, in Wellington, suffering the biggest dollar drop year on year - a decline of $216,000 to $1.71m.
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Northland's average property value fell 2.9% to $893,000 in the last three months. That's still $103,000 up on a year ago (and $271,000 above the August 2020 figure), but the pace of decline has increased since the region first slipped into negative growth territory in April.
Dragging the region down is Whangarei, where the average property value dropped 4.4% ($43,000) over the quarter to $934,000. Of the 28 suburbs in the TA that had 20 or more settled sales over the past 12 months, only one, Tutukaka, registered value growth in the three months to the end of August - a healthy 3.2% lift to $1.49m - but 11 suburbs fell harder than the TA average.
Kaipara's average property value was down 2.4% over the quarter, with Te Kopuru leading the TA's slump with a value fall of 8.1%. Mangawhai Heads narrowly escaped the winter cold spell, with its average property value down only 0.7% over the quarter.
Northland's star performers over the quarter were Waipapa (up 1.2% to $1.13m), Kaitaia (up 2.9% to $468,000) and Pukenui (up 3.9% to $791,000).
The region's most expensive suburb is Langs Beach (average property value of $2.39m) and its cheapest is Kaikohe (average property value of $385,000).
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Greater Auckland's average property value fell 4.3% ($66,000) to $1.45m in the last three months. House values in the city are 8% below where they were at the start of the year and only 2.3% above where they were in September 2021.
All seven of the region's former local government areas recorded negative growth over the quarter, with Manukau and the North Shore taking the biggest hits; their average property values fell 5.5% and 5.4% respectively over the quarter, fuelled by quieter sales activity in their higher value suburbs. The value falls in the four remaining Auckland districts were between 2.6% and 3.9%.
Of the Auckland suburbs that recorded 20 or more settled sales in the last 12 months, three - Great Barrier Island (Aotea Island), Coatesville and Pollok - saw value growth over the quarter while Totara Park suffered the biggest quarterly drop, 10.8% to $2.47m.
Property values in 41 suburbs are lower now than they were in September last year, with Manurewa East down the most year on year (-9.7% to $798,000).
The slump can also be seen in the drop-off in sales activity. Settled sales in the 12 months to the end of August numbered 29,475 - down from the 34,694 in the 12 months to the end of March.
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Waikato's average property value slipped 0.6% ($6000) to $981,000 in the last three months, with strong value growth in Waikato TA offsetting the 10%-plus drops in Hauraki and Otorohanga.
House values in the region are still 9.7% ($87,000) above where they were a year ago, and 42% ($293,000) above where they were just before the housing market took off in September 2020.
The slow rate of decline means those post-Covid gains are safe for now, but weaknesses are evident in the region's diverse housing market - some of which could be seasonally driven.
Hamilton's average property value is more than $60,000 below where it was at the start of the year, and only $33,000 ahead of September 2021 levels. The trend line suggests property values in the city will come under further pressure. A quarter of the city's 41 suburbs recorded fewer than 20 settled sales in the last 12 months and only one, Flagstaff, registered value growth in the last three months - quite a turnaround from the first quarter of the year when every suburb recorded growth.
Deanwell, in Hamilton's south-west, was the city's biggest winter loser, with its average property value down 7.6% ($55,000) to $672,000 over the quarter and down 1.3% year on year.
Waikato's best performing suburb in three months to the end of August was Meremere, in Waikato. Its average property value jumped 10.9% to $531,000 - a gain of $52,000. The weakest was Ngatea, in Hauraki, with its average property value down 12.9% ($110,000) over the quarter, although still up 12.6% year on year.
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The decline in Bay of Plenty's average property value accelerated over winter. In the last three months it dropped 4.4% ($48,000) to $1.04m, although it is still up 7.3% ($71,000) year on year, which suggests new homeowners will be able to hold on to value gains for longer.
Opotiki was the only TA to see value growth over the quarter - a modest 0.3%, but still growth in a slowing market. The biggest faller over the quarter was Tauranga, with its average property value dropping 5.6% ($69,000) to $1.172m. None of the city's suburbs recorded value growth over the period. Poike suffered the worst drop, both in the city and Waikato as a whole. Its average property value fell 9.1% ($72,000) to $723,000. The least affected Tauranga suburb was Pyes Pa, which dropped only 1.9% over the same period.
Fenton Park in Rotorua enjoyed the region's biggest value lift. Its average property value jumped 3.5% to $604,000. However, the downturn did pull Lynmore out of Rotorua's $1m club, with the prized suburb's average property value dropping 1.9% to $991,000.
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Gisborne, Hawke's Bay, Manawatu-Whanganui and Taranaki all suffered drops in their average property value over the quarter, with Hawke's Bay suffering the steepest decline. Its average property value fell 5.2% ($48,000) to $869,000 on the back of weak market conditions in the region's two biggest centres, Napier and Hastings. Sales volumes are down in the region, putting downwards pressure on prices. All 28 Napier and Hastings suburbs that recorded 20 or more settled sales in the last 12 months are in a worse position now than they were at the start of the year, and property values in seven are down by as much as 6% year on year.
The 7.2% fall in Wairoa's average property value over the quarter is a brutal turnaround for the TA, which had enjoyed a 5.3% value surge in the three months to the end of May - more evidence of the instability that goes with a low-sales markets.
Value drops of more than 5% in Horowhenua and Palmerston North dragged Manawatu-Whanganui's overall average property value down 4.1% ($28,000) over the quarter to $659,000. Only Ruapehu saw value growth, but again, low sales could be masking greater weaknesses in that market.
Taranaki finally joined the rest of the North Island in negative growth territory, with its average property down 1% ($7000) over the quarter. New Plymouth had the gentlest fall, with its average property value down 0.7% ($6000) to $798,000.
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The slump has hit Greater Wellington hard. Not only did the region suffer the country's biggest value drop over the last three months, but Greater Wellington property values are now 5.9% ($62,000) below where they were in September 2021, with the rapid gains made at the end of last year and start of this year all gone.
The capital suffered the region's steepest decline, with the average property value in the city falling 11.7% ($151,000) in the last three months to $1.137m. Also falling hard over the quarter were Upper Hutt (-9% to $874,000); Lower Hutt (-8.5% to $888,000) and Porirua (-8.3% to $947,000). Property values in all four TAs were down year on year by as much as 8%, which will provide more affordable opportunities to first-home buyers and investors in the region, but also leave many homeowners who bought at the height of the market at risk of negative equity.
Shrinking sales volumes are also a cause for concern, with the number of settled sales in the region falling from 9083 in the 12 months to the end of March to 8215 in the 12 months to the end of August. The turnaround in the capital's fortunes has been severe. In the three months to March, just three suburbs recorded declines in their average property value and every suburb was up year on year. Now, no suburb is recording quarterly growth, and house prices in 47 out of the capital's 56 suburbs are lower than they were a year ago, with the price drops ranging from as little as $6000 in Khandallah to as much as $228,000 in Oriental Bay. Some suburbs are looking particularly vulnerable: property values in Pipitea, Wellington Central, Mount Victoria, Te Aro, Oriental Bay and Mount Cook are less than 20% ahead of where they were in September 2020. The crunch has reduced Pipitea's two-year value gain to just $26,000.
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West Coast was the sole region to register growth in the last three months. Its average property value was up 2.5% ($10,000) to $403,000, driven by a relatively strong showing by Westland (up 4.2%) and Grey (2.6%). The fact that New Zealand's cheapest housing market is still growing while the rest of the country is in a slump is telling, but low sales activity (the region recorded 1107 settled sales in the 12 months to the end of August, down from 1365 in the 12 months to the end of March) makes it hard to draw too many hard conclusions about price and affordability.
Property values in the rest of the upper South Island struggled over the quarter. Nelson's average property value fell 5.9% ($53,000) to $850,000 as buyers continued their retreat, but the severe flooding that has wreaked havoc across the region is likely to have a bigger impact on values in the months ahead.
The quarterly declines in Marlborough and Tasman were relatively gentler - 1.4% and 2% respectively - but the slump has eaten up much of the gains made at the start of the year.
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Canterbury's average property value slipped 1.1% ($9000) over the quarter to $786,000, but is still up 15% ($105,000) year on year. Canterbury has been one of the last regions to feel the full impact of the slump, although value growth in the first half of the year was a crawl compared to the 9.3% surge enjoyed in the last three months of 2021. But while the region's housing market is unlikely to see the super-charged growth rates of 2021 again, it's equally unlikely to experience the steep declines seen in other parts of the country, with the region's main centres still seen as affordable and desirable by buyers right now.
Three of Canterbury's nine TAs were still enjoying growth over the quarter: Kaikoura's average property value was up 13.2% to $761,000; Mackenzie's was up 4% to $801,000 and Waimate was up 1.8% $515,000. Homeowners in those districts should avoid reading too much into these figures as low sales volumes in all three could be leading to volatility in the market. Selwyn, the region's most expensive TA, suffered the biggest drop, at 3.7%, while Christchurch's decline was a relatively small 1.1%.
At a suburb level, the biggest drop was in Akaroa, on the outskirts of Christchurch. The holiday town's average property value fell 7.2% ($73,000) to $945,000. The next biggest drops were in Selwyn's Springston (down 6.8%) and Dunsandel (6.6%). South New Brighton was Christchurch's biggest rise - its average property value was up 2.9% to $613,000 - but of the region's biggest winners over the quarter were Kaikoura Flat, in Kaikoura (up 11.7% to $870,000), and Ben Ohau, in Mackenzie (up 9.5% to $1.09m).
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Otago's average property value dropped 0.4% ($4000) to $952,000 in the last three months, while Southland's fell 2.3% ($3000) to $520,000 over the same period. Property values in both regions are still more than 30% above where they were at the start of post-Covid boom, but the gains made in the latter half of last year will slowly be eaten away by the slump.
Dragging Southland down was the 3% value decline in its biggest centre, Invercargill. The slide in Southland and Gore districts was smaller (1% and 0.2% respectively) but both TAs are low-sales environments and haven't seen the rapid growth seen in the likes of Wellington.
Otago's most expensive housing market, Queenstown-Lakes, hasn't succumbed to the market downturn yet, with its average property value up 1.8% ($33,000) over the quarter to $1.87m. The region's biggest housing market on the other hand has felt the winter chill. Dunedin's average property value fell 4.1% ($30,000) over the same period to $707,000, and is just 0.4% up year on year, with house prices in 13 of the city's suburbs lower than they were in September 2021.
