Homeowners who bought in four suburbs 12 months ago could be in negative equity due to the average property price in these areas falling by up to 3% in the past year.
And with a further 124 suburbs now worth less than they were six months ago, more areas are likely to fall into the red in the coming months.
The average property value in Oriental Bay, Auckland Central, Meremere and Newmarket is now between 1% and 2.9% lower than it was in June 2021, according the latest OneRoof-Valocity house price figures.
These hardest hit areas tend to either be the ones dominated by apartments or which are popular with the two buyer types who have left the market - first home buyers and investors, real estate insiders told OneRoof.
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The average property value in Auckland Central, in Auckland, fell $19,000 over the last 12 months to $637,000, while in neighbouring Newmarket, the average property value slid $10,000 to $1.006m over the same period. Meremere, in Waikato, recorded a $12,000 decline in its average property value, to $496,000, and Oriental Bay, Wellington’s most expensive suburb, is now $41,000 less expensive after its average property value fell from $2.674m to $2.657m.
There are another two suburbs that saw annual drops in their average property value but unlike the four above, they recorded less than 20 settled sales in the past 12 months.
Pipitea, in Wellington, and Hampton Downs, in the Waikato, were down 4.9% and 2.3% year on year.
Valocity senior research analyst Wayne Shum said that apartments tended drop in value first during market slowdowns, adding that Auckland Central, Newmarket and Oriental Bay were all apartment heavy suburbs.
Auckland Central is an apartment heavy suburb. Photo / Ted Baghurst
He said Auckland Central apartments had been popular rentals for international students and AirBnB guests, but that demand had disappeared due to Covid-19.
Owner-occupiers didn’t to buy apartments in those areas especially when there were much better value, quality and smaller scale apartment blocks in surrounding fringe CBD suburbs, he said.
Oriental Bay is also apartment heavy and there didn’t appear to be that many listings on the market because people are reluctant to sell if they are not going to get amazing prices.
“A lot of it is apartments that didn’t fare that well in the down market and even in the up market their boom wasn’t as substantial as the rest of Wellington.”
Tommy’s Real Estate sales director Nicki Cruickshank said the 1.5% drop in the average sales price in Wellington’s Oriental Bay could be due to less demand for the high-end apartments at the moment.
“We also get people coming back from overseas buying these apartments and that’s dropped off definitely. So there were quite a few last year and the year before due to people coming home through the pandemic, but we are just not noticing anyone coming home at the moment so that will probably be another reason why they’ve dropped off a bit.”
Newmarket, in Auckland, is known for its retail strip. Photo / Getty Images
Pipitea’s average house price fell to $779,000 from $819,000 a year ago and she put this down to investors and first home buyers leaving the market as a result of the tough lending rules.
“More than a quarter of our market is normally first home buyers and I reckon we are down to about 10% at best at the moment so that’s halved our first home buyer market.”
Cruickshank said properties most in demand in Wellington at the moment were three-to four-bedroom family homes in suburbs on the city’s fringe such as Island Bay, Hataitai, Khandallah and Karori where people were either scaling up or down.
LJ Hooker Huntly sales manager Sheryl Hamilton said the market was “flat” everywhere and they were struggling to get people to show up to open homes.
What was happening in Meremere - where the house price report shows values have dropped 2.4% in the 12 months - was no different to what was happening elsewhere in the Waikato, she said.
Hamilton sold two three-bedroom brick houses in Meremere to Auckland investors at the start of this year for over $500,000 which was a record for the area, but said she would not get that price now. “Right now, it’s so different.”
Meremere, in Waikato, is known for its drag-racing. Photo / New Zealand Herald
However, in the past week she had noticed some online enquiries coming through again.
LJ Hooker Pokeno owner Fred Heikell said Meremere had represented “significant value” for money compared to the rest of Auckland and as a result Auckland investors had been buying in the area in the past two years.
Heikell said it wasn’t a glamour area, but was improving due to its close proximity to Hampton Downs which provided some employment opportunities. It also attracted some first home buyers although they didn’t tend to stay for long.
Hampton Downs has also seen a drop in the past 12 months, but that was a completely different market to Meremere due to having a lot of apartments because of the race track.
There are also another three New Zealand suburbs – Forbury in Dunedin, Clutha in Otago and Grafton in Auckland – that grew less than 2 per cent in the past year and could be on the brink of falling below the average sales price a year ago.
Also on the danger list are 498 suburbs that saw zero or negative growth in the three months to the end of May. This makes up more than half of the 984 suburbs where there were 20 or more settled sales in the last 12 months. Some 330 suburbs recorded no sales at all.
The suburb that has suffered the biggest drop in value over the past three months is Chatswood, on Auckland's North Shore with the average property value dropping 8.1% or $153,000 to $1.725m.
Pipitea, in Wellington, also suffered a year-on-year drop in its average property value. Photo / Getty Images
While the suburb that lost the most in dollars value in that same three-month period is Okura Bush in Auckland's Rodney district with the average property value plunging $183,000 to $3.035m.
Hamilton Lake in Hamilton had the second biggest hit dollar wise dropping $80,000 to $1.031m, followed by Roseneath in Wellington down $69,000 to $1.947m and Wanaka in Queenstown-Lakes dropping $54,0000 to $2.04m. Otumoetai in Tauranga and Kennedys Bush in Christchurch also dropped $32,000 to $1.814m.
Meanwhile low sales volumes are also contributing to the slide in values with just 108,23 sales settled in the past 12 months, down from 112,836 in the 12 months ending April 2022.
Shum warned that in the coming months there will be even more suburbs where the average property value is worth less than it was 12 months ago especially as the market enters the quieter winter months where less sales traditionally happen.
