February sees record drop for property prices but apartment costs are going against cooling housing market - Trade Me

Property prices have dropped the largest on record but prices for apartments are going against the grain, remaining the strongest urban property type.

Trade Me's latest Property Price Index found prices continued to fall in February with the national average asking price plunging 9.2 percent year-on-year to $870,550 - marking the largest drop on record. It is the fourth consecutive month its dropped.

Trade Me Property sales director Gavin Lloyd said the steepest drops were seen in the main centres. Asking prices fell 12 percent annually in both Wellington (($860,800) and Auckland ($1,096,400) regions.

"We have not seen average asking prices this low in the main centres since mid-2021," Lloyd said in a statement.

Lloyd said the average asking prices in Auckland and Wellington had now seen a year-on-year downturn for six consecutive months.

"These two regions really led the pack but what we're now seeing is price drops spreading around the country," Lloyd said.

"The Hawke's Bay and Manawatū/Whanganui regions have now seen five months of prices declining, while the Bay of Plenty region is at three months."

Bay of Plenty ($910,850) and Hawke's Bay ($773,400) regions saw their average asking prices fall nine percent year-on-year, while Manawatū/Whanganui ($597,200) was not far behind with an eight percent drop.

Nelson/Tasman (down three percent), Southland (down two percent), Canterbury (down one percent), and Waikato (down one percent) also saw year-on-year prices tumble.

Property Price Index.
Property Price Index. Photo credit: Trade Me

"March marks 12 months since we saw the national average asking price reach its all-time high of $971,450," Lloyd said.  

"Prior to that, the average asking price reached a new record for 18 months in a row, which is almost unthinkable given where the market is now."

However, apartments continue to be the strongest urban property types in February and outside of Auckland, they are going against the grain of the market decline.

Nationwide the average asking price for an apartment fell by five percent year-on-year in February, while prices for townhouses (down 10 percent) and units (down 13 percent) dropped considerably further.

"If we remove the Auckland region from the equation, apartment prices actually jumped eight percent year-on-year last month, while prices for all other urban properties dropped," Lloyd said.

Supply and demand

Nationwide supply increased by 13 percent year-on-year in February, Trade Me found.

Every region except Wellington (down seven percent) and Gisborne (down four percent) saw a jump in supply.

Nelson/Tasman was the standout, with supply in the region spiking 61 percent year-on-year.

However, Lloyd warned that the impacts from flooding and Cyclone Gabrielle could be yet to be seen as it didn't appear to impact market supply in February.

"Despite the devastating natural disaster in Hawke's Bay last month, supply in the region jumped by eight percent year-on-year. Over the next wee while we expect to see the regional market change as the full extent of the damage and its wider implications become clearer," Lloyd said.

While supply increased, nationwide demand plummeted 13 percent year-on-year in February.

The largest drops were seen in the flood and cyclone-impacted regions of Gisborne (down 36 percent), Northland (down 33 percent), Hawke's Bay (down 28 percent), and Waikato (down 19 percent).

"With supply still sky-high and demand tailing off, it's not surprising that prices are on the decline as the market remains cool," Lloyd said.