The effect of the COVID-19 lockdown is starting to show in New Zealand's housing market with 13 of the 16 major cities showing a reduction in the rate of growth since May.
Despite the lockdown, Auckland and Wellington are still experiencing strong growth, while Christchurch has experienced "modest" growth.
Quotable Value (QV) house price index data for June shows that over the past three months, the national average house price increased by 1.3 percent to $738,018. This growth rate is down from 2.4 percent in May. The year on year increase was 7.4 percent, down slightly on annual growth of 7.7 percent last month.
QV general manager David Nagel said this indicates that the heat in the pre-lockdown market is gradually dissipating.
"A combination of pent up demand following lockdown, plus vast numbers of returning expats over the past few months has contributed to strong attendance at open homes, auctions and tenders in most locations throughout New Zealand," Nagel said.
"Record low-interest rates have also helped to ensure prices have held up well so far with an active buyer pool dominated by investors and first home buyers."
But Nagel said the worst is still ahead with homeowners expected to be under financial pressure when the Government's wage subsidy ends.
"Many homeowners that sought relief from banks with mortgage holidays are likely to feel some financial pressure heading into summer, the worst is still ahead of us."
"We're seeing some early signs of value stress with the QV House Price Index in Queenstown declining by 1.5 percent for the three month period to June. This is the first fall in quarterly values for a major urban area that we've seen this year," he said.
However he noted that drop was expected because of the city's heavy reliance on tourism and short term rental accommodation.
Nagel said the housing market will be relying on returning Kiwis over the next few months in order to fill the void.
"Market resilience over the coming months will be reliant on a continuation of returning Kiwis feeding demand as both buyers and tenants. Grounded Kiwi's unable to embark on their OE will also help to fill the void of migrants coming into the country. "
He also noted that a return to lockdown protocols would be "catastrophic to market confidence".
But Nagel said this comes off of strong growth for the past year and will just be a "passing aberration" for some.
"Our earlier projections that the market will experience a correction of 5-10 percent by Christmas time from the pre-COVID high of January to March 2020 is still looking likely."
"While some parts of the country will be harder hit than others, any fall in value should be put into context. Most parts of New Zealand have experienced value growth in excess of 5-10 percent in just the past 12 months, so for those that can weather the storm, this is simply a passing aberration", he said.
Auckland house prices up 5.4 percent year-on-year, North Shore highest
The average house price in Auckland is now valued at $1,082,54, an increase of 5.4 percent year on year and 1.5 percent over the last quarter.
The North Shore had the highest annual growth with an increase of 5.9 percent followed by Auckland City at 5.8 percent growth, and Manukau at 5.7 percent.
Quarterly growth figures from the past three months show that houses in the Rodney area increased by 0.8 percent, while North Shore values went up 1.2 percent, Waitakere was up 2.0 percent and Manukau at 1.9 percent. Values in the Papakura area went up by 1.8 percent over the same period.
QV senior consultant Rupert Yortt said a lack of listings and low interest rates are driving demand.
"The pent-up interest from the lockdown period is starting to ease as the market is showing a more accurate story of what is going in the Auckland residential market," Yortt said.
But he warned that the region is experiencing mixed results with some open homes struggling to attract potential buyers.
"Most auction rooms are seeing good numbers and good prices being achieved while at the same time, there are some properties receiving little interest at all."
He said houses at the lower end of the market are being impacted more than others.
"The hit to Kiwisaver balances is being felt at the lower end of the market with multi-offer situations often falling down to only one or two offers remaining on the table when it comes to the crunch time.
Yortt noted that developers seem more likely to negotiate because of the uncertainty in the market.
Wellington house prices up by 10.4 percent, Hutt City leading
The average house price in Wellington is now $783,655, an increase of 10.4 percent year on year and 0.4 percent in the last quarter.
Hutt City had an annual growth of 15 percent, while Upper Hutt and Porrirus also saw growth of 13.6 percent and 15.5 percent respectively.
Quarterly growth shows Hutt City increased by 0.4 percent with an average price of $686,283. The average house price for Upper Hutt and Porirua are now $639,489 and $691,176 respectively.
QV senior consultant David Cornford said that Wellington market is continuing to show resilience with plenty of buyers.
"Wellington continues to be a sellers' market and this likely will not change unless more listings come onto the market," Cornford said.
"Despite the economic outlook, buyers have shown they are still prepared to continue with their purchasing decisions, relatively undeterred."
He said houses under $800,000 in Lower Hutt, Upper Hutt and Porirua are most in demand.
Christchurch sees 3.7 percent increase year-on-year
Housing prices in Christchurch are experiencing modest growth with an increase of 3.7 percent over the last 12 months and a 0.8 percent increase in the last quarter. The average house is now worth $518,369.
QV senior consultant Kris Rogers said while there hasn't been a substantial drop, the lockdown cooled a growing market.
"To date there has been no substantial reduction in value levels noticed across Christchurch post lockdown."
"COVID-19 has however served to cool a market that was starting to develop some momentum prior to the lockdown."
Rogers said prior to the past six months, Christhucrh had limited growth for around 30-36 months in contrast with the rest of the country.
"It is anticipated that this preceding period of little to no growth will help minimise any potential effects any market downturn will have on value levels across the region moving forward."
Hamilton prices remain stable
House prices in Hamilton City have remained fairly stable with the average median one month change showing a -0.2 percent decrease. There were 468 sales in June, with the average median price for the city now at $627,777.
Tauranga increases 6.7 percent year-on-year
Tauranga saw a 6.7 percent increase in house prices in the past year with a 2.8 percent increase in the last three months.
The average house price is now $794,000. Since the previous market peak of 2007 there has been a 64.9 percent increase in house prices in the city.
Rotorua house prices increase 10.1 percent year-on-year
Houses in Rotorua are now worth just over $520,000 after a 10.1 percent increase in the last 12 months. Over the past three months house prices increased 0.9 percent. This is 77.2 percent above the last market peak which was in 2007.
Hawke's Bay see modest growth
House prices in Napier and Hastings increased 10.1 percent and 12.6 percent respectively over the last 12 months. Napier increased 2.6 percent over the last quarter while Hastings values increased 2.0 percent over the same period. The average value for Napier is $614,322, while Hastings sits at $587,931.
Palmerston North house prices experiences strong growth year-on-year
House prices in Palmerston North increased by 415.3 percent over the last 12 months and 1.8 percent over the last quarter. The average value is now $509,859
Nelson/Tasman house prices increase 5.9 percent
Nelson house prices increased by 5.9 percent over the last 12 months and 0.6 percent over the last quarter. The average value is now $661,345.
Dunedin house prices see strong growth
Dunedin house prices increased by 18.9 percent over the past year and 1.8 percent in the last three months. The average value is now $547,531.
Queenstown sees slight growth year-on-year, 1.5 percent fall in last quarter
Average house prices in Queenstown increased slightly by 1.6 percent in the last 12 months but fell by -1.5 percent over the last quarter. The average value is now $1,192,613. Since the last market peak in 2007 values have increased by 73.4 percent.
Invercargill house prices increased by 18.6 percent over the last 12 months and 2.6 percent over the last quarter. The average value is now $355,952.