QV House Price Index: Housing market would need to continue downward spiral for two years to reach pre-COVID pandemic levels

While the housing market is declining, home values remain hundreds of thousands of dollars above pre-pandemic levels, according to new figures released on Thursday. 

The latest QV House Price Index found the housing market will need to decline at its current rate for up to two more years to reach pre-pandemic home value levels.

Despite a 12.6 percent average drop in the last 12 months and a 2.7 percent decline this quarter, QV said the housing market is a long way off pre-pandemic levels.

It's been over three years since the first case of COVID-19 arrived on New Zealand's shores but the latest QV House Price Index shows home values on average are still 24.5 percent higher nationally than they were when the pandemic first hit the country.

"The housing market is still an awfully long way from its pre-COVID-19 levels, even after more than a year of very significant reductions across the motu," QV national spokesperson Simon Petersen said in a statement.

"In fact, if residential property values continue to fall at their current rate, it could still take up to two more years to hit their pre-pandemic level nationally. That's a pretty big 'if', with the market expected to stabilise before then."

Petersen said while there is a downturn in the property market, home values still remain hundreds of thousands of dollars higher for many regions.

Wellington has been the most affected of New Zealand's main urban centres by the residential property market’s current downturn to date. QV's figures show the average home value has fallen across the wider region by 21 percent since February 2022 to reach $854,092 at the end of February 2023. 

However, this figure is still $109,609 or 14.7 percent higher than when the pandemic began in New Zealand.

In Christchurch and Auckland, the pre-pandemic difference in dollar terms is still upwards of $200,000, QV found.

Meanwhile, the largest home value reductions in main urban centres in the three months to the end of February 2023 was dominated by North Island cities. First was Rotorua (down 5.5 percent), Auckland (down 4 percent), and Palmerston North (down 3.9 percent). Followed by Wellington (down 3.4 percent) and Hastings (down 3.1 percent). 

Nelson (down 0.6 percent) and Invercargill (down 0.8 percent) saw the smallest home value reductions on average this quarter. 

"So clearly there's still some way to go if the residential property market's correction continues unabated. That remains to be seen in the longer term, but the Reserve Bank’s latest increase to the Official Cash Rate will almost certainly see it maintain its current downward trajectory for the time being," Petersen said.

QV House Price Index.
QV House Price Index. Photo credit: QV

In February, The Reserve Bank (RBNZ) hiked the official cash rate (OCR) by 50 basis points. It took New Zealand's baseline interest rate to 4.75 percent, with the RBNZ having now added 450 basis points since October 2021.

Economists are also expecting a further OCR rise at the RBNZ's next meeting in April.

"Rising interest rates and credit constraints continue to have a tight stranglehold on the market currently, as they have had for more than a year now," Petersen said. 

"Many prospective home buyers are either unable or unwilling to purchase property right now while the cost of servicing a home loan is so high. Others are waiting to see when the market will bottom out, which obviously hasn't happened yet."

Here's what QV had to say about areas across New Zealand:


Auckland QV valuer Hugh Robson said there has been minimal change in the local market over the past month as it continues to cool.

"Things remain very quiet generally, with some properties taking a long while to sell and others not selling at all. There have been quite a few low sales in recent months – some nearly as low as pre-pandemic levels – and a notably big drop-off in development land sales. Obviously developers are sitting tight and waiting to see what happens next," Robson said in a statement.

He said all parts of Auckland had shown a drop in value levels this quarter, with Papakura (-6.1 percent) and Manukau (-4.4 percent) recording the largest drops of the Super City's former territorial authorities. The North Shore (-2.1 percent) saw the smallest decline this quarter, but Rodney (-9.5 percent) has fallen the least over a 12 month period – the only district to not show a double-digit decline of at least 13.6 percent.

"It is still too early to see if the recent weather events will have any major impact on the market. At this stage, it looks as though we’ll continue to see prices fall through to the end of 2023, as several prominent economists and property experts have predicted, with potentially a flat market in 2024," Robson added.


Home values in the Far North have managed to bunk the downward trend this quarter, with values increasing by an average of 3 percent. 

That is far better than in either Whangarei or Kaipara District, where values have fallen by 2.9 percent and 5.3 percent this quarter respectively. 

The average home value across the wider Northland region is now $773,464, which is $146,902 less than the national average ($920,366). 


Will Tauranga's average home value drop below $1m this year?

It looks increasingly likely at its current trajectory, with the average home value slipping 1.7 percent this quarter to $1,045,729. That figure is now 12.9 percent lower than the same time last year, but still 32.8 percent higher than its pre-pandemic level in February 2020.

"The Tauranga housing market is still not in great shape, with the average home value looking increasingly likely to drop below $1m over the winter months," QV property consultant Derek Turnwald said in a statement.

"But there are some positives on the horizon, with the Reserve Bank’s ‘engineered recession’ softening the labour market. This will help ease inflationary pressure, so that we’ll hopefully begin to see a softening monetary policy in the medium term. Migration is also starting to pick up again now, which should see demand for residential property return to a more realistic level in the future."


The Waikato region's average rate of home value decline slowed slightly in February.

The latest QV House Price Index shows values fell by an average of 1.1 percent across the wider region this quarter, down from the 2 percent quarterly decline reported in last month’s release. Annually, home values are 8.9 percent lower on average than the same time last year, but remain 37.3 percent higher than their pre-pandemic level in February 2020. 

In Hamilton, the average home value fell 2.7 percent this quarter to $795,117. That figure is 13.3 percent lower than the same time last year, but remains just over 20 percent higher – or $159,212 more in real dollar terms – than its pre-pandemic level back in February 2020.


Homes in Rotorua are worth on average $90,097 more today than they were before the COVID-19 pandemic first began in New Zealand. 

On 28 February 2020 - the date of the first confirmed case of COVID-19 in this country – the average home value in Rotorua was $552,947. Three years later to the day, that average was $643,044, which is 15.5 percent lower than the same time last year, but still more than 16 percent higher overall. 

However, the latest QV House Price Index shows Rotorua experienced the largest average home value drop of the main urban centres this quarter at 5.5 percent. 

"This was a little unexpected as the local economy appears to be recovering strongly now that the borders have reopened," QV property consultant Derek Turnwald said.

"Open home attendance has improved over the summer months, even if auction attendance remains poor. Agents are also reporting increased listings and slightly increased buyer interest. Though demand for residential property remains subdued overall, it appears to be slightly better in the higher valued suburbs of Rotorua."


The residential property market's downturn continues unabated across the Taranaki region.

The latest QV House Price Index shows the average home value in New Plymouth reduced by 1.4 percent to $721,406 this quarter. That figure is still a whopping 41.5 percent higher than before the COVID-19 pandemic began in New Zealand three years ago, despite having fallen 4.5 percent in the last 12 months.

Home values have reduced by 2.4 percent and 1.8 percent this quarter in Stratford and South Taranaki District respectively. 

Hawke's Bay

Local QV registered valuer Damien Hall said it's far too early to judge the full impact of Cyclone Gabriel on the Hawke's Bay property market.

"The good news is that the majority of the Hastings and Napier town centres were largely unaffected, so the impact may not be as great as some would expect," he said. 

"However, the rural community has been hit far and wide, leaving many homeless and many severely affected. Temporary housing facilities will be a priority for the government, as will the cleanup, which is going to take months or possibly even years."

The latest QV House Price Index shows values have fallen across the wider region by an average of 2.5 percent this quarter. In Napier, values have dropped by an average of 2.3 percent in three months, with Hastings' home values falling by an average of 3.1 percent over the same period.

"Despite some agents saying things are starting to pick up again, the latest figures suggest house prices are still falling across Hawke's Bay. Though first-home buyers appear to be showing interest again, investors are still taking a back seat for now," Hall said. 

"As expected, the reserve bank has increased the OCR again, tightening the screws on borrowing and the cost of living once again. This will continue to put downward pressure on prices."

Palmerston North

The average home value in Palmerston North is still more than $100,000 higher than it was before the COVID-19 pandemic first began in this country three years ago.

Home values have fallen another 3.9 percent on average this quarter in Palmerston North, bringing the annual net loss to 16.1 percent. The average home value in Palmerston North is now $632,263, which is still nearly 23 percent higher than it was on 28 February 2020 when the first case of COVID-19 was confirmed in New Zealand. 

"Palmerston North’s average home value has fallen below $632,000 but it obviously still has some way to go to pre-pandemic levels. It follows almost a full year of negative home value growth across the city," Local QV registered valuer Olivia Betts said.

"We're seeing extended listing periods with minimal offers coming to the table, many of them unrealistic – even in this market. Demand for residential property remains subdued generally."


A lot has changed in the three years since COVID-19 first made its way to these shores – not least is the Wellington region's average home value.

On 28 February 2020, the date of that first case, the average home value in the Wellington region was $744,483; three years later it is now $854,092. That is despite a 21 percent reduction in the 12 months to the end of February 2023, which includes a drop of 3.4 percent in the most recent quarter.

"Values continued to decrease in the Wellington region throughout the month of February. Unsold inventory remains high throughout the region, with buyers having plenty of choice and being under no pressure whatsoever to rush their purchasing decisions," QV Wellington senior consultant David Cornford said.

"Buyers are continuing to take a very cautious approach given the very high level of economic uncertainty. There are very few investors in the market currently and those who are active are hunting for exceptional buys only."


Nelson experienced the smallest reduction in average home value of the country's main urban centres this quarter. 

The average home value locally reduced by 0.6 percent to $802,746 in the three months to the end of February, which is considerably better than the national average decline of 2.7 percent in that time. Annually, that figure is 10.4 percent lower than the same time last year, but remains 20.8 percent above its pre-pandemic level.

"After the boom years of 2020 and 2021, what we have now is more of an orderly sort of market with conditional contracts, and adequate due diligence provisions. There is sound demand for tidy, or renovated properties in nice locations, whereas more run-down properties are having to be significantly discounted to reflect the high building cost to upgrade them," Local QV registered valuer Geoff Butterworth said.

He said investors remained inactive generally, with some developers even "pulling back from developments where there may be a higher risk component" – including apartment type housing in suburban locations.

West Coast

Home values on the West Coast are on average $130,563 higher now than when the COVID-19 pandemic first began.

In that time, home values have climbed across the region from $239,831 in 2020 to $370,394 in QV's latest February figures.

Home values in Westland have seen the largest average increase on their pre-pandemic levels, climbing from $279,337 at the end of February 2020 to $424,528 in February 2023. The average home value has also increased from $210,759 to $331,653 in Buller, and from $238,624 to $367,897 in Grey District. 


Home values are still on average 45.4 percent higher than their pre-pandemic level in Canterbury.

The average home value in the region is currently $718,897, which is 5.1 percent lower than the same time last year but remains more than $200,000 higher in real dollar terms than when New Zealand recorded its first official case of COVID-19 on 28 February 2020. 

In the Garden City, the average home value is currently $745,905, which is $232,403 more than its pre-pandemic level despite falling back 6.7 percent in the last 12 months. That includes a 1.6 percent drop this quarter, which is slightly better than the 1.3 percent quarterly decline reported in last month’s QV House Price Index.

"We did see a small flurry of New Year activity putting some upward pressure on some home values. However, there is further evidence now of a slowdown overall with the number of sales down and a slow decline from the previous month," local QV registered valuer Olivia Brownie said.

With an increase in the OCR and no sign of interest rates easing, she expected it to be a subdued few months ahead for the residential market in Canterbury.

"Although there are buyers, it's becoming harder to obtain finance for some, which is restricting the amount of activity, with those who are in a position to purchase having the upper hand in negotiation of prices. Whether this downturn will continue to be prolonged or if we’ll soon see a period of reduced growth remains to be seen."


The average Dunedin home is worth almost $90,000 more now than when the COVID-19 pandemic first began.

The city's average home value ($635,600) is 16.4 percent higher than it was back in February 2020, despite falling back 10.8 percent in the last year. That rate of reduction has slowed in recent months, with the city's rolling three-month average rate of decline slowing from 1.7 percent in last month’s QV House Price Index to 1 percent in the latest figures.

"Traditional market activity through summer continues to be subdued and sale prices continue to soften as buyers remain hesitant. This softening is more so for properties requiring maintenance and upgrades, which are also viewed less favourably by lenders. Where immediate maintenance is due, vendors are having to come to the party to achieve a sale," Local QV registered valuer Rebecca Johnston said.

"The continuing economic climate of 2022 – including high interest rates, high inflation, high cost of living and construction costs – will be further compounded by Cyclone Gabriel, directly impacting some of New Zealand's primary food bowls the hardest, but with wide reaching effects for the economy as a whole.

"It's expected it will take decades for these areas to recover with primary products supplemented with overseas imports, further increasing food costs and the cost of living."


Queenstown home values have declined for the second month running.

The latest QV House Price Index for February shows that the average home value declined by 1.8 percent this quarter to $1,677,988. It comes after Queenstown recorded its first quarterly home value reduction since August 2020 in last month's set of figures.

 However, the average home value in Queenstown remains 33.8 percent higher in February 2023 than it was in February 2020 when the first official case of COVID-19 was recorded in New Zealand. The great majority of that growth came in 2020 and especially 2021, with just 5.2 percent growth coming in the 12 months to the end of February 2023.


Home values are still more than a quarter higher on average in Invercargill than they were three years ago when the pandemic first began in this country.

The latest QV House Price Index shows the average home value in New Zealand’s southernmost city reduced by 6.6 percent to $464,119 in the 12 months to the end of February 2023, which includes a 0.8 percent reduction in the most recent quarter – the second smallest of the main, urban centres this month. 

Despite the downturn, that figure is still $93,181 higher than it was on 28 February 2020 when the country recorded its first official case of COVID-19. 

"There is much less demand now compared to early 2022, which is especially obvious when it comes to entry-level housing, where there is now only a small number of investors and far fewer first-home buyers looking to purchase. This is due to difficulties in obtaining suitable finance, rising interest rates, and the increasing cost of living. There is also limited demand for vacant sections given the high building costs," local QV registered valuer Andrew Ronald said.