According to recent figures from Quotable Value, the average value of a New Zealand property is falling by more than $1200 every week.
The QV House Price Index put the average value of a home in New Zealand at $945,568 as of the end of November. This is $5472 less than the $951,040 in hand at the end of October.
That works up to a weekly loss of $1262 in value for the typical home.
However, the average value throughout the country fell by $118,197 between January and November, or over $2,750 each week.
So while property prices are still decreasing, the loss rate appears moderate.
In the three months ending in November, the average value of a New Zealand house fell by 2.9%, less of a drop than the 3.9% reported in the three months ending in October.
Since the beginning of the year, QV reports that Wellington (-18.7%), Palmerston North (-14.5%), Hastings (-12.5%), Auckland (-12.2%), Napier (-12.0%), Dunedin (-11.5%), Hamilton (-11.3%), and Tauranga (-9.0%) have all seen the most significant drops in property value.
Only in Queenstown-Lakes have average values increased, by 5.4%, since the beginning of the year, bucking the national trend.
During the Global Financial Crisis (GFC) in 2008, property prices dropped by 9 percent on average across the United States between January and November and 9.6 percent for the entire year.
According to QV COO David Nagel, the past two years have been “wild in real estate,” marked by rapid expansion followed by a severe downturn.
While the aftermath of the Great Financial Crisis in 2008 was comparable, Nagel emphasized that the current situation was very different.
While the first two years of the COVID-19 epidemic witnessed growth from moderate to sustained, the market had been behaving orderly up to that moment.
In 2021, home values across the country rose by about 30 percent. In 2022, they have decreased by an average of less than half that amount, so it will be some time before we’re back to pre-pandemic levels.
Although unemployment is now low, Nagel warns that increasing interest rates and strong inflation will make life difficult for many, especially those who took out huge mortgages at the market’s height.
Wellington saw the highest annual decrease in home prices at 18.7 percent, followed by Palmerston North at 14.5 percent and Hastings at 12.5 percent.
As in Napier and Dunedin, home prices in Auckland fell by 12.2 percent, while both cities recorded drops of 12 percent in Auckland. Next came Hamilton, down 11.3%, then Tauranga, down 9.3%.
There was more excellent resiliency in Marlborough, which fell by 1.3%. New Plymouth, which fell by 2.2%, and Christchurch, which fell by 3.3%. Queenstown, however, stole the show with a 5.4% increase in home values, making it the only major city where prices were still rising in 2018.
Nagel said that the most recent numbers don’t paint homeowners a bleak picture. All of the major metropolitan centers had less negative property value growth on average this month than they did in the previous one, except Hamilton (-4.4 percent) and Rotorua (-3.9 percent).
According to Nagel, “the average pace of reduction continues to moderate in the lead-up to Christmas,” despite the Reserve Bank’s hefty increase in the Official Cash Rate last month.
“They’ve signaling further increases for next year, and with predictions of a recession being bandied about now, we should expect additional downward pressure on prices far into 2023 before we could finally see the market bottom out later that year.”
