House prices are continuing to fall from their record-breaking highs but new data has found the rate of the declines has softened.
The QV House Price Index for June found the average home decreased in value by 1.8 percent nationally this quarter, a smaller rate of decline from the 3.4 percent quarterly decrease back in May.
The national average home value is now $891,585, which is 11.8 percent lower than the same time last year and 5.6 percent less than at the start of this year, the report released on Tuesday showed.
QV operations manager James Wilson said low sales volumes continue to result in significant volatility in key housing metrics.
"This volatility is likely to continue for a while yet, with the rate of reduction continuing to leap and fall accordingly, but the stats do continue to suggest that value falls are generally flattening overall," Wilson said.
The figures show the average quarterly rate of home value decline has slowed in all but two of the country's 16 largest urban areas. Hastings fell 2.2 percent and Dunedin declined 3 percent.
Meanwhile, Rotorua (up 1.9 percent), Queenstown (up 2.9 percent) and Invercargill (up 0.2 percent ) recorded positive growth for the three months ending June 30. Values also reduced at a faster-than-average rate in Auckland (-2.2 percent), Wellington (-2 percent) and Tauranga (-2.9 percent), where the average home has now dropped below $1 million.
Wilson said parts of the country that had relatively low average home values were typically outperforming the more expensive areas, with Queenstown being the obvious exception.
"This is a result of who has been most active in the market, with first-home buyers continuing to make up a larger share of the market overall. As a result, a higher proportion of lower priced properties are being represented in sales activity, while investors and 'movers' remain generally cautious," Wilson said.
He said investors are beginning to re-enter locations they believe offer "good value for money".
Meanwhile, the country is on the cusp of the next refinance wave, Wilson said, which will see many households having to re-fix at increased mortgage rates.
This week the Reserve Bank is expected to pause interest rate increases for the first time since mid-2021, however, this doesn't mean we will see mortgage rates immediately tumble,
On Monday, Westpac warned Aucklanders who bought a home at an average price two years ago could face higher mortgage rates of around $1600 a month. It said the country is in the middle of "the great re-fixing".
Westpac said over the coming year, around 50 percent of all mortgages will come up for repricing, which will expose many Kiwis to higher rates. This could mean households are spending more than 20 percent of their income on interest costs by the end of the year - up from about 15 percent currently.
"While we haven't yet seen signs of defaults or mortgages under duress increasing to significant levels of alarm, spending levels and recent data on household savings rates would indicate that belts have been tightened across NZ and more disposable income is being funnelled towards interest servicing," Wilson said.
"This will maintain downward pressure on the market for the time being, even as increasing demand for housing continues to build up in the background."
Auckland
Home values continue to fall in Auckland. From May to June, values decreased by an average of 2.2 percent, just a slight reduction compared to 2.3 percent decrease in the previous QV House Price Index.
The average home value in the Auckland region is now $1,241,836. That figure is 13.9 percent lower than the same time last year, and 7.3 percent lower than at the start of this calendar year.
But there are signs that confidence is starting to build in the residential property market once more.
"The market appears to be showing more stability with some confidence returning. We're seeing an increase in multi-offers on property, more attendance at auctions, and a slight increase in new listings to the market - but it's still low," local QV valuer Hugh Robson said.
"The price gap between buyers and sellers' expectations appears to be closing, but prices remain low generally. It's still too early to tell if this is a major turn in the market."
Wellington
Home values decreased at a relatively consistent pace in the Wellington region last month.
This quarter, values reduced by an average of 2 percent, compared to a 2.6 percent deduction reported in the previous quarter.
The average home value in the region is now $825,554, which is 6.7 percent less than at the start of 2023 and 17.4 percent less than the same time last year. The largest reductions this calendar year have occurred on the Kapiti Coast (down 8.2 percent) and Porirua (down 8.1 percent) with Hutt City experiencing the smallest (down 4.4 percent).
"Over the first half of 2023 house values in the Wellington region have experienced a slow and weakening decline. The decline appears to be losing some momentum - particularly due to a lack of stock, with a reported increase in competition between buyers," local QV registered valuer Blake Ngarimu said.
"However, while the Reserve Bank has indicated that the Official Cash Rate would not increase, some banks have implemented a further hike in interest rates which may put a damper on things."
Canterbury
In Canterbury, average home values were down 1.3 percent this quarter.
Meanwhile, Christchurch has recorded very small amounts of positive home value growth in consecutive months. The latest QV House Price Index shows Christchurch's average home value increased by 0.4 percent to $730,488 in June.
It follows a similarly small increase of 0.8 percent back in May, with the city's average rate of decline sitting at 2.8 percent throughout the first half of 2023, compared to 5.6 percent nationally.
"Christchurch city is holding firm with a flurry of activity over the last month helping to maintain its value levels. The market appears to be showing resilience with the increase in activity counterbalanced by a decline in listings," local QV registered valuer Olivia Brownie said.
"While Christchurch city is levelling out, it appears its neighbouring districts are continuing with a very slow decline. What happens in the months to come will depend on key market drivers in the region. Right now, it appears to be unchanging and flat like the landscape, with more of the same expected in the market over the coming winter months."
