PHOTO: House prices are falling. FILE
According to the Real Estate Institute of New Zealand (REINZ), New Zealand house prices have fallen around 5% since November 2021, led by Auckland where prices are down 10%.
Westpac has also forecast a peak-to-trough decline in New Zealand home values of 15%, which would equate to a 25% real fall once inflation is taken into account.
Quotable Value (QV) yesterday released its latest figures, which showed that house prices are universally falling across both the top 25% and bottom 25% of the market:
Housing market volatility is the highest in 30 years and that is causing the market downturn to snowball as the weakness works its way up to higher-end properties…
“In my 30-plus years as a registered valuer, I have never seen anything quite like it before, and I am not sure if we have seen the worst of it, either. This residential property rollercoaster still has a way to go,” [QV] general manager David Nagel said….
“What we are seeing now is a growing number of main centres experiencing declining prices at both ends of the market. Those losses are starting to mount, month to month, up and down the property ladder.”
Price falls are likely to accelerate with Kiwibank economists tipping that mortgage rates will surge to between 6% and 7.5% – more than double what they were a year ago:
Mortgage rates are rising, and will rise further with expected RBNZ tightening. All mortgage rates on offer are likely to lift from the current levels of between 4.4% to 6.9%, to 6% to 7.5% over the coming year. More than 60% of outstanding mortgages are either floating, or rolling off fixed rates this year. The impact of the RBNZ’s tightening is being felt now and will continue to weigh on household budgets in the year ahead…
Come November, the housing market is likely to have experienced a 10% decline in prices.
A significant correction in New Zealand house prices is baked in. The question is whether it will morph into a full blown price crash, which will depend on the aggressiveness of the RBNZ’s monetary tightening.
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