New Zealand house values have fallen 11.5% since market peak in February 2022, but the rate of decline is easing, new OneRoof figures show.
The nationwide average property value tumbled more than $120,000 in the last 12 months to $971,000, driven by an aggressive and rapid lift in interest rates.
However, a drop in new listings may have helped limit the speed of value decline, with vendors increasingly holding off taking their properties to market until the sales environment improves.
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The latest data from the OneRoof-Valocity House Value Index shows the extent of the housing market weakness, with all but one region recording annual and quarterly value declines.
The worst-performing region remains Greater Wellington, where the average property value has fallen 22.7% year-on-year, and 3.7% in the last three months, to $881,000.
Also suffering double-digit annual declines are Auckland (-14.9% to $1.33m); Hawke's Bay (-13.1% to $808,000); Manawatu-Whanganui (-12.6% to $613,000); and Nelson (-10% to $821,000).
West Coast was alone in defying the downwards trend, recording annual growth of 7.4%. Its average property value of $423,000 is the country's lowest, and a big factor in its continued growth story, although quarterly growth of 0.7% suggests it won't be long before the region's prices are in decline.
Sales and new listings figures also point to challenges in the market. Nationwide, the number of settled sales in the last three months was 5.1% down on the previous quarter, and 30.6% down on the same quarter last year, with the year-on-year drop steepest in Northland (-38.1%) and Auckland (-37.9%).
Listing volumes are also on downwards trajectory. The number of new properties listed for sale nationwide in February was down 28% year-on-year, with some regions - Wellington and Gisborne notably - suffering drops of more than 40%, OneRoof data shows.
James Wilson, head of valuations at OneRoof's data partner, Valocity, said the lack of new stock may have put the brakes on value declines.
"Sellers, like buyers, are understandably worried about rising interest rates, and will be hesitant about selling in the midst of a downturn. The Reserve Bank has warned that monetary conditions will need to tighten further to get inflation back within its target range, and flagged a cash rate peak of 5.5%," Wilson said.
"Expect demand to drain from the housing market in coming months, especially in areas hit hard by the recent extreme weather events."
Wilson said that the shortage of new listings would help prop up values in some areas, although the glut of older stock was a worry, with buyers likely to see further price declines in areas where there are more homes to choose from.
"Of the country's 72 TAs, just 18 recorded value growth year-on-year, the majority of which are low price, low sales markets," Wilson said.
"Queenstown is the only major metro to keep ahead, with year-on-year growth of 2.9%, while property values in the capital saw the biggest drop, 24.5% year-on-year.
"Of the 1167 suburbs that recorded 10 or more settled sales in the last 12 months, 84% were down year-on-year, compared to just one suburb a year ago. Manui, in Ruapehu, and Glenorchy, in Queenstown-Lakes, are the country's best-performing suburbs, up 18.4% and 17.7% respectively, while Hutt Central, in Lower Hutt, and Heretaunga, in Upper Hutt, suffered the biggest annual declines, of 30.7% and 29.5%."
"The data does point to a slowdown in the speed of the country's year-long house price decline. In the last six months, Wellington's average rate of value decline has eased from just over 9% to 3.6%, while Auckland's price fall has slowed from nearly 5% to just under 4%.
Valocity head of valuations James Wilson: "Sellers, like buyers, are understandably worried about rising interest rates." Photo / Fiona Goodall
“Bay of Plenty's average rate of decline appears to have stalled, as has Nelson's and Southland's, but not so lucky are Gisborne and Waikato, where the rate of decline has gathered pace in the last three months."
Wayne Shum, senior researcher at Valocity, said despite the worsening outlook first-home buyers managed to increase their share of purchases month-on-month, rising from 41.6% in December to 43.3% in January. The share of purchases by investors in January 2023 was 20.8%, down on December's share but up 1.1% on January 2022, although the number of purchases was low.
“Interest rates are the dominant force in the market right now, and with the Reserve Bank still laser-focused on bringing down inflation, they will continue to be so in the months ahead," Shum said.
"However, the recent lift in the cash rate seems to have been baked into the major retail bank plans. There were no corresponding mortgage rate increases at the time of the OCR announcement and the fact that some of the main banks have their longer-term rates lower than their shorter-term rates may be a sign that the end of the tightening cycle is near.”
