New Zealand sees house prices 'plunge' by six-figures in March, Trade Me says

New Zealand house prices fell by triple figures in the year to March amid ongoing aggressive interest rate hikes from the Reserve Bank (RBNZ), according to a new report by Trade Me.

Prices fell 10.9 percent ($105,450) in year-on-year terms - the biggest loss on record after February's 9.2 percent annual decrease, Trade Me's property price index said. 

As of March, the average asking price was $866,000.

Trade Me said the latest "plunge" suggested the market was continuing to correct itself after COVID-19 caused house prices to surge to record highs.

Since then, the RBNZ has been on an extended run of aggressively hiking interest rates -  although there are signs the official cash rate (OCR) could be close to peaking after last week's inflation data was softer than expected. 

"When we take a look across the motu, the drops were particularly apparent in the regions which have had the biggest rises over the past few years," said Trade Me Property sales director Gavin Lloyd.

"The Wellington and Auckland property markets have been running red hot post the first COVID lockdown in 2020, so it's unsurprising that these regions have seen the sharpest drops."

Trade Me's figures showed Wellington and Auckland's house prices dropped by 13 percent in March this year from 2022, while Bay of Plenty was down 11 percent in annual terms.

Across New Zealand, housing supply increased by 7 percent year on year, Trade Me said.

Lloyd was optimistic about what the latest figures meant for those trying to get on the ladder.

New Zealand sees house prices 'plunge' by six-figures in March, Trade Me says
Photo credit: Trade Me

"When there are more options to choose between and less competition looking at properties, those in the market to buy have greater negotiating power," he said.

In addition to the supply increase, demand plummeted by 12 percent year on year.

Earlier on Wenesday, the RBNZ announced it was proposing to ease loan-to-value restrictions - the cap on how much a bank can lend relative to a purchase point - amid the substantial drop in house prices. 

"It is a good time to buy, just do your research, speak with a local agent who knows the area and, if in doubt, seek financial advice," Lloyd said. "You may still be able to buy your Kiwi dream."