National house prices continue to plunge: Expert warns it’ll get worse

Winter may be over, but there’s no warmth to be seen in Aotearoa’s housing market – the latest figures show the value of an average home has decreased by 5.5 percent.

The plunge in the value of an average home for August weakened even further than in July which saw a 4.9 percent decrease, and an expert warns it could get even worse before it gets better.

The latest figures from QV’s house price index has the price of an average home in Aotearoa at $973,848, representing an average annual increase of 1.1 percent – that’s down from the 4 percent annual growth seen last month.

QV general manager David Nagel said the residential market is “desperate for some oxygen” with a shrinking number of buyers who are spoilt for choice.

“There’s no immediate sign of things getting any better with interest rates likely to rise further and business confidence starting to wane.”

Tighter credit conditions and rising interest rates have resulted in fewer buyers competing for an oversupply of stock, Nagel said.

“First-home buyers will continue to struggle for finance with tight credit conditions and affordability constraints.”

He said with more new homes due to hit the market and adding to an already healthy supply, the downward trend in house prices will continue.

“It looks as though it’s going to get tough before it gets any easier for sellers.”

Nagel expects fewer people to enter the market with borders now open and Kiwis heading offshore.

“The residential market performs much better when net migration is positive, and that time might not be too many months away.”

QV breaks down the regions

Auckland

Home values declined by an average of 9.4 percent this calendar year, up from 7.7 percent that was reported last month – including a 5.9 percent drop in the three months to the end of August. The average home value in the Super City is now $1,383,668 – which is just $15,416 higher than this time last year.

Auckland QV valuer Hugh Robson said the slow down in Auckland’s market is expected.

“A notable trend is the increasing number of properties listed on the market with an actual asking price – a rarity over the last year or two – with agents reporting a slight drop off in enquiry levels. Interest rates continue to have a major impact.”

Northland

Residential property values declined across the Northland region by an average of 1.3 percent, including a 4.1 percent reduction in the most recent quarter.

Tauranga

The residential property market “correction” appears to be picking up pace in Tauranga as we enter into spring.

QV’s latest rolling three-month average shows home values declined by an average of 7.8 percent in the three months to the end of August, up from the 4.9 percent rate of negative quarterly home value growth reported last month.

The average home value in Tauranga is now $1,099,342, which is 6.3 percent lower than it was at the start of 2022 and just 2.4 percent higher than the same time last year.

QV property consultant Derek Turnwald said prospective buyers are playing the waiting game until they find a home that is highly desirable or seems to be good value for money.

“Demand for housing of all values has declined and is now generally subdued in comparison to what we witnessed in 2020 and 2021. Listing numbers have increased and listing periods are extending as supply increases.”

Waikato

Home values have slipped back across the Waikato region by an average of 3.2 percent so far in 2022, including a 2.4 percent reduction in the most recent quarter.

Residential property values have fallen further on average in Hamilton than anywhere else in the region, dropping by 7.2 percent throughout the first eight months of 2022, just below the national average of 7.6 percent.

Waikato QV valuer Tom Schicker said market volatility “remains high”. With economic uncertainty including rising interest rates and inflation, Schicker said the housing market will continue to slow in the region.

“This is most evident in Hamilton, where annual home value growth is now down to less than 1 percent.”

Taranaki

Home values have gone down across the Taranaki region by an average of 3.6 percent this quarter, with just one of its districts showing any positive growth for the first eight months of 2022.

Figures show negative growth this calendar year in New Plymouth (-1.7 percent) and South Taranaki (-5.2 percent), where the average home values are currently $734,970 and $454,851 respectively.

In Stratford, the average home value ($509,119) is still 2.9 percent higher than at the start of 2022. Home values remain 8.9 percent higher on average across the wider Taranaki region than they were 12 months ago, considerably better than the national average, which is just 1.1 percent.

Hawke’s Bay

The average home value in Napier has recorded its first annual loss in nearly a decade.

In the 12 months to the end of August 2022, the average Napier home value ($819,168) has reduced by 3 percent, following a reduction of 8.4 percent over the first eight months of the year.

It’s the first average annual home value loss that QV has recorded in the city since November 2012.

Hastings isn’t too far behind its close neighbour. Its average home value has declined by 9 percent throughout the first eight months of the year, including a 5.9 percent drop in the most recent quarter, with annual home value growth only just sitting in positive territory at 0.7 percent on average.

Hawkes Bay QV valuer Damien Hall expects values in the region to “bottom out”.

“Perhaps there is still a wee way to go. The past few months have seen a fairly consistent decline in values month-on-month, but confidence and activity is starting to pick up again now as banks have become more willing to lend.”

Palmerston North

Palmerston North’s average home value dipped below $700,000 last month.

It comes after seven consecutive months of negative home value growth across the city, adding up to a 10.5 percent average decline in home value for the 2022 calendar year.

Senior property consultant Olivia Betts said an adjustment in sellers’ expectations to meet current market levels has accelerated in the last couple of months.

Wellington

Home values have declined across the greater Wellington region for the seventh straight month.

It all adds up to an average decline in home value of 14.2 percent so far in 2022, with values falling furthest in Hutt City (-16.7 percent ) and Upper Hutt City (-15.7 percent) – at a rate that is more than twice the national average this year (-7.6 percent). Central Wellington (-15.1 percent) isn’t far behind.

Nelson

The average home value in Nelson has recorded its first annual reduction in more than a decade.

In the 12 months to the end of August 2022, the average home value in the city ($816,499) has declined by 0.4 percent. It follows an average reduction of 7.9 percent over the first eight months of this year, including a 5.5 percent drop in average home value this quarter.

QV manager for the region Craig Russell said the recent flooding in the region is having an effect.

“Properties in areas affected by the recent weather event will likely be viewed more critically, at least in the short term. With a large number of homes now uninhabitable, the supply and demand equilibrium has also shifted, with the region’s rental supply coming under increasing pressure, which will likely lead to an increase in rents.”

West Coast

The West Coast region saw a 4.9 percent decline in average home value.

Buller (-0.9 percent) fared better than Grey District (-6 percent) and Westland (-7.6 percent) during the three months to the end of August 2022, with the average home value in these three districts now sitting at $340,125, $348,832, and $393,483 respectively.

Annual home value growth is still positive across the West Coast at 8 percent on average – far better than the national average, which is just 1.1 percent.

The region’s rate of home value growth has dipped into negative territory this calendar year at -0.5 percent, being the last in New Zealand to do so alongside Canterbury.

Canterbury

Canterbury and the West Coast were the last two regions in Aotearoa to descend into negative home value growth for the 2022 calendar year.

In the eight months to the end of August, home values have reduced by an average of 0.6 percent across the wider region, following four consecutive months of negative growth.

The region’s annual growth rate is still looking “extremely robust” at 14.2 percent – above the national average, which is just 1.1 percent.

Home values decreased by an average of 0.8 percent last month in Christchurch – a slight bounce back from the 1.2 percent monthly decline QV reported last month. This is reflected in a 3.6 percent quarterly decline, which is only slightly more than the 3.4 percent decline reported last month.

Dunedin

Dunedin’s average rate of negative home value growth has now reached double figures for 2022.

At the end of August, the city’s average home value was $650,969, which is 5 percent lower than the same time last year and 10.3 percent lower than at the start of this year.

For comparison, the national average home value was $973,848 – up 1.1 percent annually and down 7.6 percent for the calendar year.

Queenstown

Queenstown continues to be an outlier amongst New Zealand’s main centres.

The town’s average home value has increased by 18.6 percent in the 12 months to the end of August 2022, including 4.3 percent this year, and 1.5 percent this quarter.

It’s a stark contrast to the national average home value ($973,848), which has increased by just 1.1 percent in the last 12 months, and decreased by 7.6 percent and 5.5 percent during this calendar year and quarter respectively.

Invercargill

Home values have declined for the fifth straight month in New Zealand’s southernmost city.

Invercargill’s average home value declined by 3.1 percent this quarter to $473,893. That figure is 2.6 percent lower than at the start of this year and 4 percent higher than the same time last year.