The housing market appears to have reached its turning point, with shrinking stock numbers putting the brakes on price declines around much of the country.
The latest figures from the OneRoof-Valocity House Value Index show the nationwide average property value dropped just 1.9% in the three months to the end of July to $943,000 - almost half the rate of decline recorded at the start of the year.
The easing of the downturn comes amid a slump in new listings, with the number of homes brought to market in July down 18% year-on-year and total stock down 0.8% over the same period.
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The impact of dwindling supply on property values can be seen at a regional level too.
In Auckland, the speed at which house prices have been falling eased from just over 4% in the three months to the end of January to 2.6% in three months to the end of July.
The rate of decline in Wellington dropped from a punishing 6.7% to 2.2% over the same period while in Canterbury it fell from 2.6% to 0.9%.
In all three regions, new listings volumes for July were down year-on-year, by as much as 35%, putting pressure on buyers and in some cases lifting prices.
OneRoof editor Owen Vaughan said: "Homeowners shouldn't expect a house price boom anytime soon, but market dynamics have changed quite substantially over the last six months, with buyers no longer having the advantage.
"Nationally, monthly new listings for the last six months have run 15% below the long-term post-Covid average, while in Auckland, it's 23% below.
"We're already seeing the impact of this play out in auction rooms in Auckland and Canterbury, with agencies noting a rise in clearance rates, with some properties attracting more than a 100 bids - a scenario that would be impossible to imagine six months ago."
Valocity global CEO of property Helen O'Sullivan: "We may see some green shoots in a mild recovery in listings and sales volumes as we enter spring." Photo / Fiona Goodall
Valocity global CEO of property Helen O'Sullivan said the downturn had knocked prices back to levels last seen two years ago in many regions, with New Zealand's average property value now running 3.8% below what it was in July 2021.
"The decline in values since 2022 has reversed some of the gains made during the 2021 boom. That being said, unemployment remains low at 3.4%, inflation is falling, and we are approaching peak mortgage rates. These factors may instil confidence in buyers and entice them to return to the market. Coupled with a reduced supply, we may see some green shoots in a mild recovery in listings and sales volumes as we enter spring.”
The OneRoof-Valocity House Value Index figures for July showed quarterly rises in three regions, and sharp slowdowns in rate decline among the rest.
West Coast continues to lead the country in value growth, with its average property value increasing 2.1% ($9000) over the last three months to $434,000. It is also the only region to be up year-on-year, although values in similarly low-priced Southland are just 0.6% off July 2022 levels.
Christchurch is the country's best-performing major metro, dropping only 0.5% over the quarter, and down only 7% since market peak in May last year. The downturn also appears to be easing in Tauranga, which has bounced back after sharp value drops in March and April. On shakier ground, however, are Dunedin and Queenstown, which have bounced the other way.
Almost a fifth of suburbs with 20-plus settled sales in the last 12 months saw quarterly growth in their average property value, up from just over 10% six months ago.
Most (77%) had average property values of less than $1m, with the strongest growth suburbs also some of the country's cheapest. Ponsonby, in Auckland, was most expensive suburb to enjoy a price bump over the last three months, and while the 0.2% lift that took its average property value to $2.362m was modest, it is the first quarterly increase the suburb has recorded in a year.
Other top-end suburbs on the rebound were Russell, in the Far North (up 1.2% to $1.572m); Fendalton, in Christchurch (up 2.5% to $1.533m); and Merivale, also in Christchurch (up 4.1% to $1,414m).
Analysis of property value movements in New Zealand's major metros identified 102 suburbs where prices were either on the rise or the downturn was nearing an end point. The data suggests that Christchurch suburbs are best placed to advantage of a spring lift, with some of the city's most popular suburbs already recording good quarter-on-quarter growth.
"Growth suburbs are thinner on the ground in Auckland, Tauranga and Wellington, but a positive change in the market's direction is evident in a growing number of those city's suburbs," Vaughan said.
"However, homeowners in Hamilton and Queenstown may find the road to recovery is a longer one, with the analysis finding an acceleration in price declines in both cities."
Valocity senior research analyst Wayne Shum said first home buyers remained active, claiming a 43.9% share of the market. "Actual numbers were also encouraging, with around 3100 new mortgage registrations in June, up 14% on May's total and up 19% year-on-year. The uptick correlated with positive changes to the CCCFA and the loan to value ration rules."
Shum said first home buyers' share of new mortgage registrations had risen steadily since 2022, the result of investors largely withdrawing from the market, but also reflection of lower prices and lower deposit requirements enticing new entrants.
"However, mortgage rates remain at decades high levels and more mortgage hurt is on the cards for existing homeowners coming off of low rates. And while we are approaching peak mortgage rates, we are unlikely to return to the record-low rates experienced in 2020 and 2021."
