New QV house figures: 'No question that prices are falling'

The latest home value figures show "there is no question that prices are falling", according to QV.

New Zealand’s housing market has fallen back to the same levels seen in late November 2021 amid rising rates and credit constraints, according to the latest QV House Price Index.

The average home nationwide saw its value decrease by 2.2% over the past three months to the end of May, with the national average value now sitting at $1,030,221, according to the report.

It represents an average annual increase of 10.5%, down from 14% annual growth last month.

Auckland’s home values have dropped for the third month in a row, with the region seeing an average 3.3 loss this quarter. The average value for the country’s largest city now sits at $1,469,625 with annual growth of 9.9%, down from the 14.2% reported in April.

The steepest drop in three-month value reductions were seen in Wellington and Hamilton, with falls of 4.9% and 4.4% respectively.

It was followed close behind by Napier at 4.2% for an average home value of $869,299; and Rotorua at 4.1% for an average home value of $730,398.

“There’s no question that prices are falling, especially now as buyers take the upper hand in negotiations. It’s really just a matter of how much further values will fall before finding the new equilibrium,” QV general manager David Nagel said.

Just two of the 16 major urban areas saw an increase in three-monthly house price values, with Queenstown Lakes (4.5%) and Marlborough (1.1%) continuing to defy the downward trend in quarterly growth, according to the report.

Queenstown is the only major urban location to record an increase in the rate of value growth compared to last month.

Despite the latest quarterly value reductions, annual value growth continues to track positively with the average property in New Zealand increasing in value by 10.5% since May 2021.

The Canterbury region recorded the highest annual growth at 24.9%, while the lowest growth was in the Wellington region at just 3.1% growth over the past 12 months.

Nagel said “almost all of the country has passed the value peak of the market cycle” initially driven by investors and first-home buyers competing for limited stock and the availability of low interest loans.

“That led to massive value increases to the more affordable locations, so it’s no surprise these are the first values to get hit. But as the market downturn takes hold, even the higher valued properties have started being impacted now,” he said.

But Nagel warned interest rates are “likely to climb further to battle inflationary pressures” and the economic uncertainty caused by continued supply chain issues and the war in Ukraine.

“We’ve still got a way to go before the market bottoms out. We’re unlikely to see any significant value growth until at least 2023 when fully open borders might allow for the return of tourists and immigrants to New Zealand at pre-Covid levels.”