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The housing market has shifted down a gear, with the latest figures from the OneRoof-Valocity House Value Index showing an easing of house price growth across most regions.
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Auckland property values have suffered their first drop in almost two years.
The city's average property value fell 0.1% in the first three months of 2022 to $1.553 million, according to the OneRoof-Valocity House Value Index.
The drop was Auckland's first quarter on quarter decline since the first outbreak of Covid-19 put the country's housing market on hold.
House prices in 58 of the city's 276 suburbs dropped, with Mt Roskill's average property value suffering a $166,000 drop, the country's steepest.
The figures point to further house price tumbles in the city, with Auckland's average value dropping 1.4% ($22,000) in March alone.
No other region saw price declines over the quarter or month on month, but the nationwide average property value did slip -0.27% to $1.098m in March.
James Wilson, head of valuations at OneRoof's data partner, Valocity, said that home loan restrictions, rising inflation and the outbreak of the Omicron variant had dented Auckland house prices.
"Auckland is bearing the brunt of the housing market slowdown. The last time the city's average property value dropped was June 2020, when the housing market was recalibrating itself after a two-month-long lockdown brought on by the arrival of Covid-19.
"However, back then interest rates were at an all-time low and buyer demand was rising. This time interest rates are on the up and the housing market is tipped for further declines."
Northland recorded the biggest value rise over the quarter - 7.4% to $918,000 - but the March growth figure of 1.3% shows the heat has come out of the region's housing market.
The slowdown was also evident in other strong performers: Taranaki's average property value rose 6% over the quarter but grew just 0.56% in March, while Otago's growth over the quarter was 5.5%, but 0.4% in March.
OneRoof editor Owen Vaughan said that the monthly growth figures pointed to more regions joining Auckland in negative territory. "The easing of Covid restrictions and the passing of Omicron peak will bring more positivity to the market as will the Government's intention to defang the more contentious elements of the CCCFA, but the headwinds are building and market is clearly in slump territory."
The monthly growth figures showed the housing market had cooled in New Zealand's other major metros. Queenstown-Lakes’ average property value soared 9.6% over the quarter to $1.867m but only 0.86% of that was in March, while monthly growth slowed to 0.83% in Wellington and 0.25% in Christchurch after strong starts to the quarter.
Hamilton's average property value dropped 0.32% in March, while values in Tauranga and Dunedin slid 0.16% and 0.13% respectively.
Four TAs - Auckland's North Shore Waitakere, Westland and Lower Hutt - suffered drops in their average property value over the quarter and a further 24 dropped month on month.
The housing market was strongest in Wairoa, in Hawke's Bay, where the average property value jumped 4.04% in March to $489,000, and Ruapehu, in Manawatu-Whanganui, which saw monthly value growth of 3.21% to $450,000.
Valocity head of valuations James Wilson says the market is cooling. Photo / Fiona Goodall
However, most of the TAs that saw strong growth over the quarter cooled over the last month.
First home buyers' share of purchases for the quarter nationwide dropped one point to 37.5%, while investors' share of the market remained steady at 24%.
First home buyers were the dominant buyer group in every major metro except Queenstown, where investors claimed the lion's share of the market, although their hold slipped over the summer, dropping from a high of 38% to 36.4%.
First home buyers increased their share of the market in Dunedin, from 42.9% to 44.6%. They also regained lost ground in Tauranga, climbing back from a low 33.6% to 35%.
The figures also pointed to resurgence in Hamilton investment market, with investors stepping into the void left by first home buyers, and lifting their share of new mortgage registrations from 30.1% to 33%.
Wayne Shum, head of research at Valocity, said the overall figures reflected the pressures buyers had felt since the introduction of tighter home loan rules in December.
“The relaxation of CCCFA announced in March may alleviate some of the difficulties first home buyers faced, but rising mortgage rates and cost of living pressures will continue to plague their purchasing decisions.
Houses in the Christchurch suburb of Kennedys Bush. Prices growth in the city has slowed. Photo / Peter Meecham
"Investors are also feeling the squeeze and some are reassessing the overall impact of rising interest costs and the inability to offset interest cost against rental income.”
Wilson said that whilst the economic headwinds facing the housing market were not strong enough yet to push values down across the board, the lack of confidence in the market was clear to see. "The quick step-change in the market has forced many buyers and sellers to adopt a ‘wait and see’ approach. For those who need to sell quickly, such conditions could result in pain or disappointment."
Wilson added that while recent figures from the Real Estate Institute of New Zealand had shown monthly drops in Auckland's median sale price, the OneRoof-Valocity House Index figures better reflected changes in the entire market.
“The median sale price is a reflection of what has sold over a certain period of time, and can be a good gauge of sale prices but is still limited by the number and price band of the stock that has sold. It may not always be the best indicator of the value of those homes that haven’t sold or aren't on the market.”
“In times like this, when sales volumes are lower, more robust way to measure what’s happening in the market is to use value models, such as the OneRoof-Valocity House Value Index. This advanced model analyses all properties which have sold and compares them based on their characteristics and attributes to all homes in an area, so you are measuring how market trends/changes based on sales are impacting all homes in an area, not just measuring the changing nature of what’s sold.”
HOUSING MARKET AT A GLANCE
New Zealand's average property value grew 21.5%, or $194,000, in the last 12 months to $1.098m, but dropped 0.27% month on month. Quarterly growth was 2.1%, or $23,000. Northland and Taranaki were the hottest regions over the quarter, recording value growth of 7.4% and 6% respectively. Wairoa, in Hawke's Bay, was the country's best-performing territorial local authority over the last three months, with its average property value up 18.7% to $489,000. Wairoa also registered the biggest value growth month on month - a jump of 4.04%.
Most expensive: Herne Bay, in Auckland, is still New Zealand's most expensive metro suburb. Over the last three months it added another $107,000 to its average property value, reaching $4.225m. Its nearest metro competition is Saint Marys Bay, whose average property value hit $3.297m. Speargrass Flat, a lifestyle suburb north of Queenstown, has the highest overall average property value, at $5.142m (up 19.9%, or $854,000, on January's figure on the back of some strong sales).
Herne Bay is still New Zealand's most expensive residential suburb. Photo / Chris Tarpey
71 suburbs with 20 or more settled sales in the last 12 months have an average property value of $2m-plus, up from 59 three months ago and 31 a year ago. The $3m-plus club has also exploded; in April 2021 just four suburbs had an average property value of $3m and above, but none had broken the $4m barrier. Now, there are six suburbs in the $3m-$4m price bracket, one in the $4m-$5m bracket and one that's broken the $5m barrier.
Cheapest: With an average property value of $238,000, Runanga, in Grey, is the best place to bag a bargain, but buyers should expect competition - the town saw value growth of 7.2% over the quarter and 40% over the last 12 months, a clear sign of rising demand. West Coast has seven suburbs with an average property value of less than $300,000.
In demand: Whiritoa, in Hauraki, recorded the biggest QoQ growth, with its average property value up 20% to $1.138m. Thirty-one suburbs saw their average property value grow by more than 10% in the last three months, down from 91 suburbs in the three months to the end of February.
Biggest winner: Speargrass Flat gained the most, dollar-wise, in the last 12 months. Its average property value jumped more than $1.4m. Year on year, 34 suburbs saw their average property value grow by more than $500,000.
Biggest loser: The suburb that has suffered the most over the last three months is Mount Roskill, in Auckland. Its average property value fell 11.6% ($166,000) to $1.268m. All up, 105 suburbs saw negative or zero growth in the three months to the end of March, up from 24 in the three months to the end of February. The majority of price declines were in Auckland.
* Figures only cover suburbs with 20-plus settled sales in the last 12 months.
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Northland is the country's strongest housing market, with the region's average property value growing 7.4% ($63,000) in the three months to the end of March to $918,000. But the monthly growth figure of 1.32% indicates the region's unusually hot summer run has come to an end.
The average property value in Kaipara, which is home to several high-value beach locations popular with Auckland buyers, exceeded the $1 million mark for the first time after quarterly growth of 9.4%. Value growth in Whangarei over the last three months was also high, at 8.3%, and brought the city $75,000 closer to joining Kaipara in the $1m club. Value growth in the Far North over the quarter was a solid 5.2%, but growth for the month was just 0.13%, which suggests the TA could be in negative growth territory come May.
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Three of the region's seven former local government areas - Auckland City, North Shore and Waitakere - recorded negative growth over the last three months, but all suffered drops in their average property value over the last month, a sign of further drops to come.
House prices in 58 of the city's 276 suburbs dropped over the quarter, with Mt Roskill suffering the biggest decline. Its average property value fell 11.6% ($166,000) to $1.268m. Other problem suburbs include: Torbay (down 6.4%, or $97,000, to $1.409m); Te Atatu Peninsula (down 4.8%, or $69,000, to $1.371m); Henderson (down 4.6%, $55,000, to $1.132m); and Avondale (down 4.3%, $57,000, to $1.17m).
The city's most expensive suburbs haven't escaped the downturn either, despite claiming some big sales over the quarter. Prices slid 1.4% ($44,000) in Remuera and 1.2% ($27,000) in Waiheke Island's Palm Beach.
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Waikato's average property value inched its way closer to $1m, with the region recording QoQ value growth of 3.5%, but monthly growth was a barely noticeable 0.2%.
At a TA level, prices slipped in Hamilton (-0.32% over March) and Waikato (-0.8%) but the brakes were on across the region, with Hauraki's QoQ growth of 12% crumbling to just 0.98% in the last month.
Of the 105 Waikato suburbs that recorded 20 or more settled sales in the last year, six saw no growth or negative growth over the last 12 months. Pokeno, just south of Auckland, suffered the biggest decline, with its average property value down 6.3% ($72,000) over the last three months to just above $1m. Also on the slide were Meremere (-2.6%), Raglan (-1.4%), Te Kauwhata (-1.1%) and Port Waikato (-0.6%). Cambridge is also at risk, having recorded no value growth over the quarter.
Forty Waikato suburbs saw value growth of more than 5% over the quarter. The high-end beach town of Whiritoa saw a 20% jump in its average property value, from $941,000 to $1.138m, on the back of some big sales in January and February.
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House prices in the Bay of Plenty have continued to ease: growth was 3.9% in the three months to the end of March, down from 4.4% in the three months to the end of February and 5.7% in the three months to the end of January. Monthly growth was 0.65%, with the region's average property value sitting at $1.077m.
The region has largely avoided the value declines seen in Auckland, thanks to solid growth in the Western Bay of Plenty, which has benefited from strong holiday home sales, and a levelling off of price declines in Rotorua.
Of the 66 Bay of Plenty suburbs or towns that registered 20 or more settled sales in the last 12 months, 10 saw no growth or negative growth over the last three months. Most were in fringe or rural locations, with the biggest price declines in Mamaku, in Rotorua (-5.1%); Waiotahe, in Opotiki (-2.7%); and Fordlands, also in Rotorua (-1.8%). High-end Pyes Pa, in Tauranga, also felt the slowdown, with its average property value falling 1.3% ($16,000) to $1.225m.
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The central North Island regions recorded solid value growth over the last three months. Ahead of the pack was Taranaki, where the average property value grew 6% ($41,000) to $719,000, followed by Hawke's Bay (up 4.6% to $934,000), with Gisborne and Manawatu-Whanganui up 3.6% and 3.5% respectively. The monthly growth figures tell a different story, with all four regions registering little to no value growth.
The slowdown is also evident at a TA level, with value growth all but vanishing in March. There are two exceptions, though: Wairoa, in Hawke's Bay, and Ruapehu, in Manawatu-Whanganui, were the best performing TAs not only in the Central North Island but across the entire country. Wairoa's average property value was 4.04% ($19,000) to $489,000 and Ruapehu's was up 3.21% ($14,000) to $450,000.
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House price growth in Greater Wellington is disappearing, with the region's average property value up 2.9% over the quarter, and 0.26% in the last month, to $1.141m.
Within the region, the slowdown is most evident in Lower Hutt. It is the only TA to suffer negative growth over the quarter, with its average property value falling 0.5% ($5000) to $1.027m, but three other TAs finished the summer also in a weakened state: Porirua, Kapiti Coast and Upper Hutt all recorded value declines in March, and small increases over the quarter.
Monthly growth was negligible for Carterton (+0.67%), Masterton (+0.63%), and Wellington (+0.83%), but South Wairarapa held steady with monthly growth of 1.14% and quarterly growth of 4.3%.
Just five Greater Wellington suburbs - four in Lower Hutt and one in Porirua - saw declines in their average property value over the quarter.
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West Coast's game of catch-up over the summer added another $18,000 to the region's property values, but house price growth over the last month was a barely noticeable 0.25%. Two of the region's TAs - Grey and Buller - managed to keep their heads above water in March, buoyed by momentum in January and February, but Westland's average property value fell 1.8% over the quarter (0.23% of which was in March).
West Coast sales volumes are falling, and agents have reported a cooler market over the last month. Kumara, south of Greymouth, suffered the steepest drop, with its average property value down 4.2% ($14,000) to $320,000. Properties in Blue Spur, Arahura Valley, Franz Josef Glacier and Hokitika also felt the impact of the slowdown, and will likely see further value drops over the autumn.
House price growth in neighbouring Nelson, Marlborough and Tasman softened over the quarter, but all managed to stay out of negative territory. Even Tasman, which has seen some of the lowest price growth over the summer - a measly 1.1% - managed to hold steady over the last month.
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Property value growth in Canterbury was above the national average for the quarter, but it's clear the region's housing market has lost a lot of its energy. Some TAs have fared better than others; Selwyn's average property value, clearly benefiting from heightened new-build activity in the TA, grew 5.6% ($54,000) to $1.018m over the last three months; and Ashburton saw its average property rise 4.9% to $597,000.
Canterbury's less populated, more rural TAs have reverted to type and have proved unsurprisingly sluggish over the quarter, but Christchurch, too, is exhibiting signs of a market slowdown, with the city's average property value up just 2.6% over the quarter - quite a comedown from the giddy highs of nine and 10% value growth seen in the closing months of 2021.
The majority of Christchurch suburbs with 20 or more sales under their belt in the last 12 months kept their heads above water over the quarter, but Burnside and Merivale were not so lucky; the former's average property value fell $15,000 and the latter's dropped $27,000. Richmond and Christchurch Central grabbed the best of the summer, with their average property value up 8.6% ($45,000) and 9.4% ($60,000) respectively.
Canterbury's biggest faller was Lake Tekapo. The average property value in the tourist spot dropped 5.2% ($60,000) to $1.086m.
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Momentum in January and February helped Otago and Southland record reasonably high property value growth for the quarter - 5.5% and 4.5% respectively - but the market came to a stop in March, with both regions turning in a negligible amount of value growth.
In Otago, value growth was strongest in Queenstown-Lakes; its average property value rose 9.6% ($163,000) to $1.867m over the last three months, but only 0.86% of that lift was in March. The lifting of New Zealand's border restrictions, and the arrival of international visitors, could recharge the tourist spot's housing market. Time will tell.
No such luck for Dunedin. While the city's overall house price drop in March was a barely noticeable 0.13%, it lacks the tourism power of Queenstown and it’s likely the housing market there will continue much of 2022 in a funk, with North East Valley, Mornington and South Dunedin looking particularly vulnerable.
Southland lacks the firepower of Queenstown, but all three of its TAs saw decent property value growth over the summer, but like Otago, none, or very little of that growth took place in March. Sales volumes in the region are low, but of the 34 suburbs and towns with 20-plus sales over the last 12 months, a third saw value growth of more than 5% over the quarter. House prices in East Gore, in Gore, and Riversdale, in Southland, enjoyed the strongest quarterly lifts - 8% and 9% respectively - while house price growth in Bluff and Clifton, Invercargill, was weakest.
