House sale volumes the weakest in a decade, CoreLogic says

The bustling real estate market appears to showing more signs of cooling. 

CoreLogic's quarterly property market and economic update, released on Wednesday morning, has revealed the weakest volume of property sales in a decade.

Chief property economist Kelvin Davidson said higher mortgage rates and reduced credit availability is having a significant impact on the market. 

The slowdown in property value was likely to continue throughout this year, CoreLogic believes.

"We expect property market activity will continue to be subdued, with sales volumes perhaps declining by as much as 10 percent this year and another 5 percent or so in 2023," Davidson said.

"This is best characterised as a slowdown though, rather than a serious downturn."

In terms of property values, there was a notable slowing of growth - up 0.7 percent across New Zealand in the three months to March. That's the smallest quarterly rise since October 2020, when values spiked by 1.9 percent.

House values fell in major centres including Hamilton, Wellington, Christchurch and Dunedin.

Davidson said rising mortgage rates would likely keep those property values soft for the remainder of this year.

"However, if unemployment stays low, we don't anticipate significant or widespread falls in property values."

House sale volumes the weakest in a decade, CoreLogic says
Photo credit: Getty Images

A slowdown in lending to property investors has been a key driver behind the trends, he said.

"But owner-occupiers have also cooled more recently too, especially with the reduction in the low deposit lending speed limit on November 1 from 20 percent of activity to 10 percent.

"The common drivers of the widespread post-COVID upswing in property values, including low mortgage rates and tight supply, are no longer in play just as the total number of listings available rises due to a slowdown in sales activity. 

"There are many factors that will influence each region over the coming year or so," Davidson said.