New Zealand house prices have dropped for the tenth month in a row with buyers still holding the balance of power.
In the latest Corelogic report the value of residential properties are down by 7.2 percent compared to last year.
This is the biggest drop since May 2009 where there was a decline of 7.9 percent.
Corelogic NZ Chief Property Economist, Kelvin Davidson said it wasn’t a surprise to see property values generally fall further in January.
Davidson said he’s not seeing any real evidence yet that homeowners are looking to ramp-up their selling activity, with unemployment still low, they can either sit on the market for as long as it takes, or de-list.
"But at the same time, buyers in a comfortable borrowing position still hold the balance of power when it comes to pricing, and this has clearly driven a further leg down for values in January." Davidson said.
While it’s still too early to decide whether last month’s political changes have had any material impact on the property market, Mr Davidson said it seems unlikely they will, with more concern around the General Election on 14 October, and which party will lead the next Government.
"No doubt some existing and would-be property investors will be hoping for a National victory and a follow-through on their promise to reverse Labour’s Brightline and interest deductibility changes. But as the old cliché goes, there’s nothing guaranteed in politics," he said.
Auckland
Auckland’s minor 0.1 percent fall over the month reflected a ‘mixed bag’, with the City area rising by 0.8 percent, but Rodney, Waitakere, Papakura, and Franklin recording further steady declines. Despite a rise of 0.4% since October, Auckland City’s average values are still 7.2% lower than a year ago, with most other parts of the super-city down by between 8% and 10%.
Wellington
Wellington continued to drop in the first month of 2023, although it wasn’t universal across the main sub-markets. Porirua rose by 0.9 percent, while Kapiti Coast’s decline was relatively small. On the flipside, Lower Hutt and Wellington City both dropped by about another 1 percent. Aggregated up, the wider Wellington area has seen values fall by 18.1% in the past year, with Upper Hutt at -21.6 percent.
Dunedin
Dunedin and Wellington also recorded falls larger than the national average in January, however
Dunedin is starting to show a bit more resilience, with values only having edged down by 0.3 percent since October. That said, they’re still 10% lower than January 2022.
Regional
When analyzing the markets outside the main centers, Mr Davidson re-iterated the slightly inconsistent nature of the changes – which is to be expected, given different local factors at any point in the cycle.
“Gisborne, Whanganui, New Plymouth, Queenstown and Invercargill all saw average property values rise in January, whereas Hastings fell 1.9% and Nelson’s decline wasn’t far short of the 1% mark,” he said.
Looking ahead, Davidson said a peak-to-trough decline in average property values in the vicinity of 15-20 percent still remains a possibility, expecting even lower prices occuring in the second half of this year.
However he warned there were risks in either direction.
“Mortgage rates across most durations are at or close to a peak – almost regardless of whether the Reserve Bank pushes up the official cash rate by 0.75 percent or 0.5 percent on 22 February,” he said.
Davidson said he’s watching the labour market very closely, including the unemployment rate and wages from the final quarter of 2022.
