Quotable Value (QV) says it's shaping up to be another difficult winter for the housing market, with interest rates, inflation and rising unemployment continuing to bite.
The latest QV House Price Index shows the national average value of New Zealand homes increased by just 0.1% over the three months to the end of April. In Auckland, the country's largest housing market, the average value was down 0.7% over the same period.
April was the third consecutive month average house values in Auckland declined.
Other urban centres to post declines in average values over the three months ended April were Napier -0.2%, Hastings -0.7%, and Palmerston North -0.1%. Values were flat in Waikato and increased by just 0.2% in both Tauranga and Christchurch. (See the chart below for the full district breakdown).
QV's national average home value is now 2.7% higher than it was at this time last year, but is still down by 12.9% (-$136,993) compared its peak in late 2021.
"What little momentum the housing market still had going into autumn appears to have all but evaporated now," QV Operations Manager James Wilson said.
"Home value growth has largely stalled across much of the country, reflecting difficult economic conditions that aren't getting any easier and aren't likely to anytime soon," he said.
"The economy is doing it tough right now.
"High interest rates continue to bite, inflation remains stubbornly high and the unemployment rate is rising. Business confidence is low and cost of living pressures remain a significant challenge for many households."
"Amidst all this, a surplus of real estate listings is helping to maintain downward pressure on prices," Wilson said.
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47 Comments
This is healthy. It’s what the country needs. And no, I’m not joking. Downside risk needs to be a factor in any investment decision making.
Agreed. It's been there for some time but masked by ever lower cost of debt to keep the scam going. Just like removing steroids from a body builder you get deflation.
Perhaps it might be down by 5% by the end of the year...
Stiff upper lip Harvey
Assume you're not referring to house prices? If you are, time to wake up
Just yesterday you posted that you expected a price rise by end of this year HM. I can repost your comment if you like.
Did you miss the zero off after the five? Timing is difficult with so many chaotic issues but if the 70-90% decline in US multi level buildings is a leading indicator the perfect storm is still heading our way.
Did you miss a zero after the 70 and 90? The market is down 700-900% in the US 😅
Prices will need to come down quite a bit before they can be classified as healthy..
Based on current conditions, chances of it happening is quite probable
You are correct I calculate affordability based on RBNZ wish that LVR is 6 times income so on $100k borrowing is $600K plus deposit assuming the six times is gross income.
https://www.oneroof.co.nz/news/middle-class-nightmare-unhealthy-debt-pr…
People cannot afford to buy at these levels.
Yep the tide is going out. The pretenders are stuck high and dry.
That's an interesting article.
It always fascinates me how some mid age people on big salaries max out on debt and buy outsize houses (instead of living well within their means and experiencing freedom from work).
Agree that we are on a different trajectory now... more things are changing than we realise and the economic norms of the last 100 odd years may be challenged (e.g. USA as the global military/economic powerhouse.. global peace.... oil underpinning currencies... AI driving massive change in jobs and business and more) thus we may need to be more cautious and switch investment strategies.
Long and short is that betting on expected cyclical changes in investments in property, conservative shares and interest rate settings may not be so straightforward.
Oh no, those poor people, sending their kids to private school, spending $10k/mth on clothes, groceries & eating out, wanting to tell the bank to piss of because they have been asked to provide "them more bank statements and stuff" when they want to buy a $2m to $4m home
The $2M - $4M home was $350k - $500k 20 years ago.
If you're the next generation coming through working the same jobs for similar pay packets, why is it bad to want to live in the same neighborhood, in the same type of house, as the same people holding down the same type of jobs as you? Just 20 years later?
Ladder being pulled up and all that.
Yeah and now you need both parents working too.
Still modest climbs through most of the country. Auckland will be facing the bulk of the unemployment at the moment so is seeing a slight decrease. At the same time rents are increasing.
James Wilson spitting out a few well worn cliches such as "inflation remains stubbornly high". Absolute nonsense.
And if you just read the headline you would think that property prices have dropped 5% in 3 months rather than rising 0.1%.
0.4% increases in property prices in a year where inflation will probably run at 4% is a real house price drop.
Inflation was 0.6% for the 3 month period.
My point from my comment is that house prices are static, but if you only looked at the headlines then you would think prices have dropped rapidly over the past 3 months.
Wellington will see reduction of jobs from Govt cuts and flow on effects to contractors and other hangers on.
I see no factors or justifications that may cause house prices to skyrocket again over the short term.
There have been no credible arguments from those who wish to see insane prices rises again (in my mind.)
The only exception could be another idiotic round of QE and low interest rates that inflate asset prices due to a deteriorating economy, but anyway who really knows?
However, over the longer term, what truely terrifies me for the sake of NZ society is the cashed up rich (whose wealth has increased more than ordinary people since covid) snapping up assets such as RE, should there be a significant drop in prices… thus pumping the asset prices and pushing them out of the reach of ordinary people.
The growing gap between the rich and the poor should concern us all (including the wealthy!) Wherever this happens worldwide, the social contract deteriorates.
Crime rises, diseases become more prevalent, education levels drops, innovation declines, the middle class gets gutted and the regions empty out to move to urban slums to service the needs of the rich.
On a longer timescale this is gradually playing out in New Zealand, you can see it in the declining quality of our institutions. We’re not as different as we’d like to imagine to other countries who are stuffing up their children’s future.
However, over the longer term, what truely terrifies me for the sake of NZ society is the cashed up rich (whose wealth has increased more than ordinary people since covid) snapping up assets such as RE
I understand where you're coming from, but is it really so different from those with plenty of assets leveraging them to obtain more in a rising market? Two sides of the same coin maybe.
Essentially, I think the only way to deal with this sort of trend is to shift taxes from earned to unearned income. Lots of options on how to do that, just a lack of political will.
QV is like a 3 month rolling average so isn't really showing what's happening today. REINZ out this morning will show how things are really fairing. Badly. And beyond "well it's always worse in Winter" bad.
So many ignore the time gap between a sale agreement and settlement so figures are always behind the facts.
Friend in Palmerston North looking for first home said three houses on her shortlist have just been withdrawn from sale. I keep telling her there will be a motivated seller but seems there is still a glass floor amongst vendors.
A glass floor doesn't sound very supportive.
Yep, it seems it's definitely a game of chicken out there. I think your advice to her is sound, there will indeed be a motivated seller but perhaps also tell her to be ready to pounce, she will not be the only one waiting.
Probably just a delay to wait for the tax free dale window to shorten up. Vos spevuvestors always pay their tax....
Come July when the new bright line rules come in your friend may have a lot of houses on that shortlist.
trouble for the housing market over winter, says QV
That's an understatement its going be ugly and it needs to be.
Should never have gone where it did biggest Ponzi this country's ever seen.
Well put together by our friendly bankers.
What a mess.
I prefer it described as "..a great winter for the housing market.."
Prices falling is not a bad thing.
The house price explosion of recent years has been New Zealand's greatest social disaster.
The property market is proving to move remarkably resilient - it’s flat not in free fall.
Nominally flat. So pretty bad. Pretty much in free fall when compared to any other asset.
April HPI MONTH ON MONTH Medium price
National Medium -1.2%
NZ ex AKL -1.7%
Auckland -1.9%
as expected all the spin is on the year on year numbers, a few more months like this and they will all be given back,
Auckland is falling fast now as winter arrieves
Only a fool would compare April data with March data, which is the busiest month of the year. To get a real picture, you need to compare the same months from the previous year.
The “Median price - REINZ” graph on this website shows prices increased a lot between 2020 and 2022 and now the prices are tracking back down to the long term trend line.
I think Auckland median price to be back to 2022 level by 2026.
I think 2016 prices by 2026 is more likely - at least in Wellington where a lot seems to back around 2018-19 prices in real terms already.
I think you’re right. The outlook for sellers in Wellington looks very bleak indeed.
You say 2022 level-or is it 2020 level. That was a huge Covid Bubble that topped out in 2022-why would that hold?
What's missing in this discussion about falling House Prices in Auckland is not the 12 month comparison but the 36 month comparison--that's where things get really ugly. With Average Price falls of up to 25% baked in that means the equity that buyers had during the "Covid Bubble" is long gone-while the cost of servicing a mortgage has tripled-rising from the go to 1.9% one year rates to the current 6.8% rates for a 2yr. That's an awful lot of hurt that a current buyer brings to the negotiating table.
And wait another 6 months for the painful awareness to sink into Vendors that there is no quick fix. Just ask the Irish or Americans how long it took for price recovery after the 2007 price collapse--the answer wasn't 2-3 years-more like 10 plus years.
Japans took much much longer.
We lost buying our next home by $10,000 to an investor who immediately listed it for rent. Cheers!
True in some ranges-but that is not happening for Houses in the $2 to $3mil range where the drops have been massive
This website always talks about the housing market from a sellers perspective. A 'bad' market seems to actually be good for buyers and some headlines of that nature might be welcome
This website is a financial website, Joker, helping people make money. So yes, if something goes down in value, it's reported as being bad.
Policy lags work both ways. Even if the RBNZ slashed rates to zero today, it wouldn't be an instant fix. We've not even hit peak unemployment yet, and non-performing loans have increased by about 75% over a year. For commercial real estate, that figure is around 265%. We're looking at a balance sheet recession where everyone will be too busy sorting out their finances. Remember, the RBNZ's interest rate hike from 0.25% to 5.5% is unprecedented, a 2100% increase! With all the debt accumulated, a deflationary bust isn’t just a possibility, it is highly likely, and when it hits, it'll hit hard
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