House prices nationally drop 3.4%

The correction in house prices is settling in, as the market continues to cool from rising interest rates and an oversupply of listings.

Canterbury recorded its first quarterly home value drop since before the Covid-19 pandemic began. Photo: RNZ / Nate McKinnon

Quotable Value’s house price index shows average values fell 3.4 percent in the three months ended June to $1.01 million, compared with the 2.2 percent fall in the May quarter.

But annually, the average property value was up 7.2 percent from a year ago, down from the 10.5 percent growth last month.

In Auckland, the average value sat at $1.44m, a drop of 4.1 percent over the last three-month period, with annual growth of 7 percent.

QV general manager David Nagel said the national market has changed considerably.

“Just six months ago the national market was tracking at just under 30 percent value growth per annum. This has fallen back quite dramatically, down to single figures, with further reductions inevitable over the coming months as this home value correction continues across Aotearoa.

“A 3.4 percent [national] reduction over a three-month period doesn’t sound like much when you consider the gains over the previous couple of years, but when you look at the fall in value throughout the first six months of 2022, it becomes a lot more significant, particularly if you purchased at the peak of the market in late 2021,” Nagel said.

Wellington and Napier recorded the biggest three-month value reductions, falling 6.6 percent and 5.4 percent respectively.

QV said only one of the 16 major urban areas it monitored showed an increase in quarterly value – that region being Queenstown-Lakes with 1.9 percent value growth.

Canterbury, which had been the most resilient market in the country, recorded its first quarterly home value drop since before the Covid-19 pandemic began.

Home values dropped by an average of 1.2 percent – Hurunui was down 0.3 percent, Christchurch down 1.7 percent and Selwyn down 3.2 percent.

QV Canterbury consultant Olivia Brownie said the region’s market appeared to have reached a turning point.

“We’d expect to see the current economic pressures continue to build, causing more declining home values in the short term due to increased costs and increasing interest rates,” she said.