The New Zealand housing market saw one of its worst quarterly dips in the three months leading up to September, and it may not be done yet.
CoreLogic New Zealand reports that the 4.1% quarterly decrease is second only to the 4.4% reduction during the 2008 financial crisis, which occurred 14 years ago. CoreLogic said on Wednesday in Wellington that property values had fallen for the sixth straight month, decreasing 1.5% after falling 1.8% in August. The annual rate of gain also reduced to 2.8%, the lowest since 2019.
Property Slide
The housing market quarterly declines the largest since 2008.
According to Head of Research Nick Goodall, “the housing market is firmly in retreat following an unprecedented era of expansion” due to rising interest rates and less access to financing. Although the housing market slowed its drop in September, experts say it’s still too soon to say the worst is over.
Since March of this year, when the Covid-19 outbreak restricted borders and fiscal and monetary stimulus prompted a rush to ownership, CoreLogic estimates that home prices have increased by 41% in the preceding 19 months. With a fifth consecutive 0.5 percentage point boost to 3.5 percentage points predicted later today, prices are falling as the Reserve Bank rapidly hikes rates to contain inflation. In September, property values lost in each of the six major cities. The average price in New Zealand’s most populous city, Auckland, dropped 4% during the quarter to NZ$1.39 million ($790,000). Wellington had an annual fall of 9.1%, bringing the average price down to NZ$984,640 from a previous peak in the city of NZ$1,032,040. The national average value fell to NZ$977,158.
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Goodall predicted that the RBNZ’s expected rate hikes in 2023, which might reach 4.75 percent, will have a negative impact on the property market.
He predicted that competition among banks would keep mortgage interest rates low and that anticipated rate hikes were already included in short-term rates. However, further rises are likely to follow, so it may be too soon to declare the depression over.
