OneRoof House Price Report - April 2023

The house price slump could be coming to an end in the South Island, new OneRoof data shows.

The rate of decline in Canterbury, the country’s second-biggest housing market, has slowed considerably in the last three months, with the region’s average property value down just 0.3% quarter-on-quarter.

And quarterly growth in West Coast, Nelson and Otago was either positive or unchanged, according the latest figures from the OneRoof-Valocity House Value Index.

While property values in much of the North Island are still deeply challenged, with quarterly declines of almost 4% in Auckland and Wellington, the turnaround in Canterbury’s fortunes will be a welcome sign for homeowners.

The region’s average property value of $755,000 is only 2.7% ($21,000) below where it was a year ago and 5.45% ($43,000) below its value peak of $798,531 in June last year.

West Coast is the only region where house prices are up year-on-year. Its average property value of $423,000 is 7.4% ($29,000) above April 2022 levels.

The nationwide average property value was down 11.5% ($69,000) year-on-year to $971,000, while Auckland’s average property value tumbled 14.9% ($232,000) to $1.33 million and Wellington’s fell 22.7% ($258,000) to $881,000.

James Wilson, head of valuations at OneRoof’s data partner, Valocity, said that while the figures indicated that Canterbury’s house price slump was nearing an end, they also should be treated with caution.

“The slowdown in Canterbury’s value decline in the last quarter points to a much shallower slump in the region compared to what’s happening in Auckland and Wellington. Certainly, anecdotal evidence from the auction floors in Christchurch points to renewed confidence among buyer groups.

“Sales have also picked up but they are still below volumes recorded at the start of 2022, and days to sell in the region is well above the 10-year average. Rising interest rates remain a worry and the banking crisis in the US and in Europe may lead to further destabilisation in New Zealand.”

Wilson said the outlook for the wider housing market was uncertain. “We are still in the dark as to the full impact of the extreme weather events of January and February, but activity in Gisborne and Hawke’s Bay is likely to be depressed in the coming months. The average property value in 53 of the country’s 72 territorial local authorities is down year-on-year, and values in 11 TLAs, including Wellington City and Auckland City, are below where they were two years ago.

“At a suburb level, some of the year-on-year value losses exceed half a million dollars.”

Valocity head of valuation James Wilson: “Sales have also picked up but they are still below volumes recorded at the start of 2022." Photo / Fiona Goodall

Of the 1145 New Zealand suburbs with 10 or more settled sales in the last 12 months, just 188 recorded year-on-year property value growth. The strongest growth was in Ohai, Southland. Its average property value was up 18.7% ($28,000) to $178,000. For long-time homeowners, the suburb with the strongest five-year growth was Ongaonga, in Central Hawke’s Bay. Its average property value has grown 185.1% ($472,000) to $727,000 since March 2018.

The biggest year-on-year drop was in Aro Valley, Wellington. The suburb’s average property value fell 31.8% ($430,000) in the last 12 months to $923,000. The suburb that has grown the least in the last five years was Newmarket, an apartment-heavy suburb on the fringes of Auckland CBD. Its average property value of $886,000 is only 0.45% ($4000) above where it was in March 2018.

New Zealand’s most expensive location for property is Coatesville, in Auckland’s northern fringes. The suburb, which is dominated by lifestyle blocks and is home to Zuru billionaire Nick Mowbray and his $32.5m mansion estate, has an average property value of $3.812m, up 6% ($216,000) year-on-year.

With an average property value of $251,000, the cheapest suburb is Runanga, in Grey, West Coast.

Overall, there were 422 suburbs with 10 or more settled sales in the last 12 months that have an average property value of more than $1m, down from 531 a year ago.

OneRoof editor Owen Vaughan said unease in the wider economy and the devastation caused by Cyclone Gabrielle had put a dent in the volume of new stock coming onto the market.

“Total listings for New Zealand on OneRoof.co.nz in March were up 2.23% month-on-month and up 23.26% year-on-year, but new listings nationwide were down 17.09% year-on-year. The worst-hit regions for new listings were Hawke’s Bay, down 33% year-on-year, and Gisborne, down 53%. New listings for Auckland fell 23.59% year-on-year while the decline in Canterbury was just 8.55% but 28.23% in Wellington.

“For sellers, the year-on-year rise in total listings will put further downwards pressure on prices. However, the fact that new listings are down suggests two things. First, new sellers are holding off until the market improves. Second, the decrease in new stock could end up limiting the rate of the house price decline, by increasing the competition for listed properties.”

Vaughan added that the last three years had conditioned Kiwis to expect extreme highs and lows in the housing market, a mind-set that could hamper perceptions of future growth, when it happens. “The last three years were not normal. It wasn’t normal to see sales of $2m-plus in Otahuhu and Otara, in South Auckland, and it isn’t normal to see price drops of around $1m in those same suburbs. When prices do pick up the percentage changes won’t be huge, and that will be frustrating for some.”

Wayne Shum, senior research analyst at Valocity, said mortgage registration figures showed that the post-holiday drop-off in January this year was more severe than in 2021 and 2022. “There is an expectation that values will continue to fall this year, hence buyers are cautious. This was further exacerbated by the weather events, which delayed marketing and settlement activities and has therefore affected mortgage registrations, which reached a new two-year low.

“Nationally, there was a slight recovery of first-home buyers from 40.5% to 41.3%, however investors are down from 24.5% to 23.6% as higher interest rates have made it more difficult for purchases to be cash neutral.”

Shum said there was still mortgage hurt to come for borrowers who are still sitting on rates at 3% and lower. “While reduced property prices means a lower deposit is required, higher interest rates mean higher repayments. For investors, this may mean negative cash-flow and serviceability concerns.”