Houses in New Zealand’s most expensive region are the most expensive they’ve ever been, new OneRoof figures show.
The average property value in Queenstown-Lakes hit a new peak of just over $2 million at the end of July, but the house price story outside the wealthy enclave wasn’t so encouraging for homeowners.
New Zealand’s average property value dropped 1.5% to $962,000 in the three months to the end of July, as economic uncertainty and high interest rates continued to take their toll on the housing market.
The rate of house price decline accelerated across much of the country, with Auckland and Wellington feeling the worst of the new slump.
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Auckland house prices tumbled 2.4% over the quarter and 0.2% year-on-year. At $1.287m, the city’s average property value is only $8000 above its post-slump trough point at the end of June 2023.
Wellington’s average property value is 2.4% higher than a year ago, but its quarterly fall of 2.5% was the country’s steepest.
House prices dropped in another eight regions, reflecting low confidence in the market, although recent positive headlines around interest rates and inflation may put the brakes on further falls.
Several factors have contributed to the recent decline in property values. Interest rates of 7%-plus, higher living costs and rising unemployment have sapped buyer enthusiasm, while the withdrawal of First Home Buyer has put some first-time buyers on the back foot.
There’s still a glut of stock on the market, which has suppressed price growth and led to, in some cases, heavy discounting by stressed vendors.
Value growth was strongest in lower-value regions and towns – Gisborne was up 4% over the quarter, and Ashburton 2.2%, driven by a lift in investor activity.
The sole outlier was Queenstown-Lakes, where the average property value was up 1.8% ($37,000) over the quarter to $2.05m. That’s a new value peak for the tourist hotspot, and $710,000 up on its pre-Covid value.
OneRoof editor Owen Vaughan said: “Queenstown-Lakes has benefited from strong buyer interest – domestic and international – in Arrowtown and Wanaka and a flurry of $5m-plus sales.
“Buyers, unencumbered by high interest rates, seem to be in a rush to beat the heat of the next boom.”
Christchurch’s dip of just 0.9% over the quarter reflects its resilience to current economic pressures and market stability. “Compared to Auckland and Wellington, Christchurch prices are still affordable for first-time buyers. Higher interest rates don’t hurt so much,” Vaughan said.
OneRoof editor Owen Vaughan: "A more sustained market recovery will depend on lower mortgage costs." Photo / Fiona Goodall
Vaughan said momentum was building for a cut to the Official Cash Rate by the end of 2024, setting the scene for a market revival in 2025. “The slump appeared to be over this time last year, but the price lifts enjoyed in the closing months of 2023 were more of a ‘dead cat bounce’.
“A more sustained market recovery will depend on lower mortgage costs. The first round of interest rate cuts is likely to reignite buyer interest, although this may be modest at first.”
Of the 835 suburbs with 20-plus settled sales in the last 12 months, only a quarter enjoyed quarterly value growth, with the biggest lifts in Netherby (+12.4%), Allenton (+9.1%), Kaikoura (+8.2%), and Tinwald (+7.6%) – all Canterbury suburbs and all in the $500,000 to $700,000 price bracket.
The biggest dips over the quarter were in the central Auckland suburbs of Mount Wellington (-7.9%), Mount Albert (-7.9%), and Onehunga (-7.2%) – all too expensive for first-time buyers but not desirable enough for cashed-up movers.
The return of the slump has eroded growth across much of the city, with, values falling over the quarter in 90% of the city’s suburbs. The picture was similar in Dunedin and Tauranga, but worse in Wellington City, where values in all but two suburbs fell, and Hamilton, where no suburb recorded growth.
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