Source: CoreLogic
The housing market downturn in Aotearoa NZ retained its negative momentum in September, with values falling by a further -1.5% over the month, easing slightly from the -1.8% fall in August.
CoreLogic NZ Head of Research, Nick Goodall, said the quarterly fall of -4.1% from July to the end of September ranks as one of the worst periods for national value falls on record, only marginally better than the three months to the end of August 2008 (-4.4%), in the wake of the Global Financial Crisis.
“As interest rates have increased, and credit is harder to attain, the housing market is firmly in retreat following an exceptional period of growth. Values increased 41% over a 19-month period when the COVID-19 pandemic closed borders and fiscal and monetary stimulus drove a push to asset ownership,” Mr Goodall said.
“Despite the rate of decline easing in September, it’s probably too early to suggest the housing market has moved through the worst of the downturn. With the OCR expected to increase a further fifty basis points to 3.5% later today, that downwards pressure on house prices is likely to continue.”
Mr Goodall added strong economic performance (low unemployment, strong GDP) and persistently high inflation could see the OCR increase further into 2023, likely prolonging the current downturn. Restrictive credit rules, such as tight loan to value ratios, are also likely playing a role.
CoreLogic House Price Index – National and Main Centres
Change in property values
Average Value
Month
Quarter
Annual
New Zealand
-1.5%
-4.1%
2.8%
$977,158
Auckland
-1.3%
-4.0%
3.0%
$1,387,767
Hamilton
-0.8%
-2.7%
4.1%
$856,829
Tauranga
-1.8%
-3.5%
5.5%
$1,104,155
Wellington
-2.5%
-8.5%
-9.1%
$984,640
Christchurch
-0.6%
-3.4%
13.6%
$756,695
Dunedin
-1.7%
-5.4%
-4.0%
$645,376
Property values continued to fall across all six main centres in September withWellington continuing to experience the weakest performance. Values across the broader capital area (including the Hutt and Porirua) fell -2.5% over the month and -8.5% over the quarter, to be -9.1% below the same time last year.
“This is a record rate of fall for the region, stretching back to 1990,”Mr Goodall said.
“It surpasses the -5.2% quarterly drop at the end of September 2008 which led to the -9.0% annual fall at the end of February 2009. The same can be said of Dunedin’sthree-month fall of -5.4%, surpassing the previous record low of -5.1% at the end of July 2008. However the annual fall of -4.0% is still some way off the record of -11.0% for the city at the end of February 2009.”
Mr Goodall said the rate of fall in these areas may be heightened due to how stretched affordability became, compared to incomes over the recent house price boom. Current buyers, particularly first home buyers may be unable and unwilling to pay the prices previously expected, especially as mortgage interest rates continue to increase.
For the other main centres, values continue to decline but the average still remains higher than it was a year ago, with values in Christchurch in particular 13.6% higher than the end of September 2021.
Across Auckland there are signs of the rate of quarterly fall stabilising, with values -4.0% down for the three months to the end of September, a slight improvement on the fall of -4.6% at the end of August, though it is probably too soon to call it a trend just yet.
CoreLogic House Price Index – Wellington
Change in property values
Average Value
Month
Quarter
Annual
Kāpiti Coast
-1.8%
-3.5%
-3.7%
$913,322
Porirua
-2.9%
-8.6%
-9.6%
$878,982
Upper Hutt
-4.1%
-7.3%
-10.1%
$804,216
Lower Hutt
-3.6%
-8.2%
-11.9%
$848,336
Wellington City
-1.7%
-8.7%
-7.6%
$1,120,909
“Looking into the weakness across Wellington, the impact is relatively broad-based with Wellington City down -8.7% over the quarter and Lower Hutt down -11.9% over the past 12 months, both records for their respective cities,” Mr Goodall said.
“Property values hadn’t fallen as far or as consistently in the Kāpiti Coast District, however after a drop of -1.8% in September, the average value is now -3.7% below the same time last year.”
CoreLogic House Price Index – Auckland
Change in property values
Average Value
Month
Quarter
Annual
Rodney
-2.4%
-3.9%
9.7%
$1,354,206
North Shore
-1.1%
-3.8%
2.2%
$1,542,769
Waitakere
-1.8%
-3.5%
0.8%
$1,103,143
Auckland City
-1.0%
-3.4%
0.7%
$1,600,394
Manukau
-1.5%
-5.0%
4.9%
$1,239,933
Papakura
-2.1%
-4.3%
10.2%
$1,024,967
Franklin
-1.3%
-3.1%
11.2%
$994,054
Values continued to fall across the Super City in September, but the rate of decline reduced in many cases, in particular Auckland City where the monthly change of -1.0% was 1.2 percentage points lower than the -2.2% change in August.
Regional House Price Index results
CoreLogic House Price Index – Other Main Urban Areas (ordered by annual growth)
Change in property values
Average Value
TA
Month
Quarter
Annual
Palmerston North
-1.8%
-3.5%
-5.3%
$689,609
Napier
-2.7%
-6.5%
-4.6%
$804,837
Hastings
-4.5%
-7.3%
-3.4%
$814,537
Nelson
-2.7%
-5.7%
0.8%
$812,967
Whanganui
-3.2%
-5.6%
1.3%
$530,029
Invercargill
-1.6%
-2.1%
3.6%
$462,319
Rotorua
-1.8%
-3.5%
5.5%
$692,512
Gisborne
-2.4%
-4.0%
5.8%
$629,650
Whangārei
-1.7%
-5.1%
7.8%
$800,136
New Plymouth
0.1%
-2.3%
8.6%
$731,884
Queenstown
0.4%
-0.2%
12.9%
$1,681,735
Greater weakness is spreading around the other main urban areas with the majority seeing a fall of more than -1.5% over September, though New Plymouth and Queenstown bucked the trend with minor increases in value over the month.
“All areas have seen the average value drop over the last three months however, with particular weakness in the Hawke’s Bay region. Hastings values fell -7.3% over the quarter and Napier declined -6.5%. Both these areas joined Palmerston North as regions where values are now lower than the same time last year,” Mr Goodall said.
“The Queenstown Lakes District continues to defy gravity and logic with values remaining 12.9% above this time last year, no doubt boosted by the return of tourists and reflecting a distinct lack of land and properties in the adventure capital of the world.”
Outlook for NZ housing values
“As is often the case, all eyes are on the Reserve Bank of NZ as they review the OCR later today,” said Mr Goodall.
“The consensus is for another 0.50% lift, taking the cash rate to 3.5%. While this decision doesn’t come with the full monetary policy statement, which would include updates to the Bank’s forecasts, most other economists have lifted their forecast peak for the OCR, following other strong economic data, including a positive result for GDP in Q2.
“Increases to the OCR may not pass on fully to mortgage interest rates, with competition strong among the banks and forecast increases in the rate also already ‘priced in’ to short term rates. However, with expectations of ‘more increases to come’ it may be premature to expect the end of the downturn to be here any time soon. That said, as long as unemployment remains low, the market is likely to be in an orderly correction rather than outright slump.”
For more property news and insights, visit corelogic.co.nz.
Note:
The CoreLogic HPI uses a rolling three month collection of sales data. This has always been the case and ensures a large sample of sales data is used to measure value change over time. This does mean the measure can be less reactive to recent market movements but offers a smooth trend over time. However, due to having agent and non-agent sales included, the index provides the most comprehensive measure of property value change over the longer term.
From May 2022 HPI, changes were incorporated into the index to take advantage of new and improved recent sales processes which has led to a larger sample of sales (including recent sales) being used, enhancing the HPI and making it even more reflective of recent market movement.
About CoreLogic NZ
CoreLogic NZ is a leading, independent provider of property data and analytics. We help people build better lives by providing rich, up-to-the-minute property insights that inform the very best property decisions. Formed in 2014 following the merger of two companies that had strong foundations in New Zealand’s property industry – Terralink Ltd and PropertyIQ NZ Ltd – we have the most comprehensive property database with coverage of 99% of the NZ property market and more than 500 million decision points in our database.
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