New credit rules and rising interest rates are having an impact on the housing market as price growth slows.
The latest Quotable Value figures show the average house increased in value by just 2.3 percent nationally over the past three-month period to the end of February, down from the 6.1 percent quarterly growth in January.
The national average value now sits at $1,053,483 - an average annual increase of 22.9 percent, down from 26.8 percent annual growth last month.
For Auckland, the average value now sits at $1,519,781, climbing 2.5 percent over the last three-month period, with annual growth of 23.2 percent, down from 27.6 percent in January.
QV General Manager David Nagel said the data shows house price growth is slowing as tightened credit rules and rising interest rates push buyers out of the market.
"Three monthly value growth for the December to February period may look quite rosy at 2.3 percent growth, but for the last two months there's been no growth at all, while February actually shows a decline in values by 1 percent. So the strong December numbers are masking what's really happening out there," Nagel said.
"There are less buyers out there now with the tightened credit rules and rising interest rates taking a number of first-home buyers and investors out of the market altogether."
He said housing listings are up, giving buyers plenty of options and putting pressure on prices.
"It's taking a lot longer to sell a house this year with open home attendance down and auction clearance rates significantly impacted. While part of this may be attributed to COVID-19, primarily we're seeing a residential property market that has peaked and is searching for the new equilibrium.
He said the downward trend is being seen across the country - a clear sign the market has turned.
"Only Palmerston North and Dunedin have registered a decline in three-monthly growth, but if you look at just February in isolation, it's dead even with eight urban areas showing growth and eight showing a decline."
But Nagel said annual price growth is still "exceptionally high".
"[It's] reflecting the very strong value increases we saw last year. So that means it will take some time for this measure to reduce to more 'normal' levels of growth."
Nagel said the war in Ukraine, ongoing concerns about COVID-19, and high inflation and interest rates are causing uncertainty.
He said predictions of a surge of Kiwis leaving New Zealand as the borders open could also impact the housing market, with new migrants not expected to make a difference until later in the year.
"We'll likely see a continued gradual decline in the rate of home value growth with a correction in some locations that have experienced hyper-value growth throughout the past 12 months," Nagel said.
Home values dropped by an average of -1.4 percent across the Auckland region in February – a far cry from the 2.1 percent growth recorded in the same month last year, and a significant drop from the 3 percent growth recorded during December 2021.
Local QV registered valuer Hugh Robson said prices in more expensive suburbs such as the North Shore, some eastern suburbs, and in the inner city are slowing in particular.
But Robson said new build developments are continued to sell well, partly because they're exempt from new tax rules for investors
"This is partly due to the recent changes in tax rules for investors, where mortgage repayment costs can only be claimed for new-build residential properties. But the next six months will be very interesting for developers, as they also face rising interest rates, tighter lending rules and major shortages in building materials."
House prices in Northland haven't yet seen the same drop as many other regions in February. Home values are up by an average of 1.9 percent overall for the month, and 6.1 percent for the quarter.
Kaipara District's three-month rolling average home growth rate is 8 percent, down from the 11.1 percent reported last month, but it puts it among the fastest-growing districts in the country currently. The average home value there is now $952,4853 – still rapidly closing in on the $1m mark.
Whangarei's home values are up by an average of 6 percent for the quarter – including a 2.4 percent increase in February – and home values in the Far North have increased by an average of 5.4 percent over the last three months.
House prices are slowing in Tauranga too with values rising by just 0.2 percent in February.
The city's three-month rolling average is currently 4.3 percent – still relatively high compared to the national average (2.3 percent) – but likely to continue to cool as we start to move into the winter months, QV property consultant Derek Turnwald said.
"It is no longer a seller's market. There are less prospective buyers out there and a greater number of vendors. Though there's still plenty of demand, tightening lending criteria and rising interest rates mean prospective buyers are either not able to purchase at all, or are having to scale back their purchase options," he said.
Prices were all but static across the Waikato region last month, with growth of just 0.1 percent on average.
In Hamilton, however, home values dipped for the second month in a row, declining by -0.4 percent in February, after also dropping by -0.1 percent in January. A relatively strong finish to 2021 is the only reason the city is still showing positive home value growth for the quarter.
Outside of the big city, all other Waikato territorial authorities are still showing relatively strong home value growth for the quarter – but much of that growth was modest at best during February, with Otorohanga District and South Waikato District also showing small declines.
House prices in Rotorua are continuing to experience only minor growth, with the average value of a home now $761,309 – up just 1 percent in February.
It's the third month in a row that home value growth has been kept to 1 percent or less, with the city's three-month average sitting at 2.5 percent overall.
Meanwhile, Taranaki's property market has finally begun to slow, with the average home value dropping across the region by -1 percent in February.
New Plymouth home values declined by -0.9 percent to a new average of $755,194, with the neighbouring districts of Stratford and South Taranaki also experiencing declines in values. But prices throughout the Taranaki region remain 26.5 percent higher than the same time last year.
Hawke's Bay also saw all-but-static growth across the region in February − with Hastings even posting a modest decline of -0.4 percent.
Home values continued to grow in neighbouring Napier, rising by 0.8 percent in February. But local QV registered valuer Damien Hall said the region's residential property market was finally starting to cool after a bumper 12 months that saw values increase by an average of 25.8 percent across Hawke's Bay.
It's the same story in Palmerston North with the city's three-month rolling average showing a decline in average home value of -1.1 percent. The average home value is now $753,832 − still 18.1 percent higher than the same time last year.
Home values dipped by an average of -1.1 percent across the Wellington region last month, with all districts in decline.
QV's three-month rolling average is still showing all-but-static growth at just 0.1 percent since the end of November 2021, but local QV senior consultant Blake Ngarimu said that number is likely to drop into negative territory as rising interest rates and tough lending conditions continue to bite.
"The February stats show the first signs of a dip in the market, with all major districts within the Wellington region experiencing a decline in values. It is now clear that we have entered a much softer property market and some vendors may need to adjust their price expectations."
Nelson has not yet experienced the same home value drops many other areas are seeing.
The average value of a home in the city ($895,656) increased by 1.4 percent in February, and 4.2 percent over the last three, positioning it among the fastest growing urban centres in the country. Even so, local QV senior property consultant Craig Russell said growth has slowed considerably since the beginning of the year.
Meanwhile, house prices are levelling off in Christchurch, where the average home value increased by just 0.7 percent last month.
The city's three-month rolling average remains relatively high at 4.8 percent, but local QV property consultant Olivia Brownie said prices are slowing across the city.
Home values across the larger Canterbury region increased by 0.8 percent last month and 5.2 percent over the last three, with Timaru recording a small -0.3 percent drop in average home value in February. Everywhere else saw at least modest gains, but down from previous highs.
Dunedin is another major New Zealand city that saw declining home values in February.
They dropped by an average of -1.5 percent in Dunedin last month, and -0.3 percent over the last three. This represents the second-largest reduction in home values of all the main centres, after Palmerston North.
National revaluation manager Tim Gibson said it would be a good time to be a buyer if lending criteria wasn't so strict.
"First-home buyers appear to be the most affected by banks tightening their lending criteria. As a result, there has been a noticeable drop off in enquiries and attendees at open homes."
Queenstown saw a small reduction in its average home value for the second month in a row.
In February, the popular tourist town's average home value dropped -0.3 percent to $1,594,516, after also seeing a small decline of -1.3 percent in January. The three-month rolling average is currently sitting at just 0.1 percent growth but is expected to dip into negative growth in the next month.
At $497,030, the average home value in New Zealand's southernmost city is just short of crossing the $500,000 mark.
Invercargill has so far proven immune to the home value drops that have occurred in other major centres last month, with values increasing by an average of 1.4 percent last month and 4.5 percent over the last three. Values remain 19.5 percent higher on average than at the same time last year.
Provincial centres, North Island
As economic headwinds continue to cool many of the main centres' residential property markets, these North Island provincial centres have so far proven immune. Hauraki (13.3 percent) was one of just four districts that still recorded double-figure growth this quarter, and the only one in the North Island). In second and third place were Waitomo (9.4 percent) and Kaipara (8.1 percent) respectively.
Provincial centres, South Island
Three of the four fastest-growing districts this quarter were on the South Island. They are Buller (18.3 percent), Hurunui (10.8 percent), and Ashburton (10.2 percent).