TheNew Zealand Market SLOWDOWN SLOWDOWN IN MARKET CORRECTION

The houseprice slumpcould be comingtoanend in theSouth Island,new OneRoofdatashows. TherateofdeclineinCanterbury, thecountry’s second-biggest housingmarket, has slowed considerably in thelastthree months,withthe region’s average property valuedownjust0.3% quarter-on-quarter

And quarterlygrowthinWestCoast, Nelson andOtago waseitherpositive or unchanged, accordingthe latest figures from theOneRoof-ValocityHouse ValueIndex

Whilepropertyvalues in much of the NorthIslandare still deeply challenged, with quarterlydeclines of almost 4% in Auckland andWellington, theturnaroundin Canterbury’sfortuneswill be awelcome sign forhomeowners.

Theregion’saverage property valueof $755,000 is only 2.7%($21,000) belowwhere it wasayearago and 5.45% ($43,000) belowits valuepeak of $798,531 in June last year West Coast isthe only region wherehouse prices areup year-on-year. Itsaverage property valueof$423,000 is 7.4% ($29,000) above April2022 levels

Thenationwide average property value wasdown11.5% ($69,000) year-on-year to $971,000, whileAuckland’saverage property valuetumbled 14.9% ($232,000) to $1.33 millionand Wellington’s fell 22.7% ($258,000) to $881,000.

JamesWilson, head of valuations at OneRoof’sdatapartner,Valocity, said that whilethe figures indicated thatCanterbury’s houseprice slumpwas nearing anend, they also shouldbetreated with caution.

“TheslowdowninCanterbury’svalue declineinthe last quarterpointstoa much shallower slumpinthe region compared to what’s happening in Auckland andWellington. Certainly, anecdotal evidence from theauction floors in Christchurch points to renewed confidence amongbuyer groups.

“Sales have also pickedupbut they arestill belowvolumes recorded at thestart of 2022, anddaystosellinthe region is well abovethe 10-yearaverage.Risinginterestrates remain a worryand thebanking crisis in theUSand in Europe mayleadtofurther destabilisation in NewZealand.”

Impact of Cyclone Gabrielle

Wilson said theoutlook for thewider housing market wasuncertain. “Weare still in the dark as to thefull impact of theextreme weathereventsofJanuary andFebruary, but activity in Gisborne andHawke’s Bayislikely to be depressed in thecomingmonths. The average property valuein53ofthe country’s 72 territorial localauthorities is down yearon-year, andvalues in 11 TLAs,including Wellington City andAucklandCity, arebelow wheretheyweretwo yearsago

“Atasuburb level, some of theyear-on-year valuelossesexceed half amilliondollars.”

Of the1145New Zealandsuburbs with 10 or more settledsales in thelast 12 months, just 188 recorded year-on-yearproperty value growth Thestrongest growth wasinOhai, Southland. Itsaverage property valuewas up 18.7% ($28,000) to $178,000. Forlong-time homeowners,the suburb with thestrongest five-yeargrowthwas Ongaonga, in Central Hawke’sBay.Its averageproperty valuehas grown185.1% March2018.

Thebigge Valley,Welli property va last 12 mont has grownt Newmarket, on thefringe property va ($4000) abov NewZea property is fringes. Thes lifestyle bloc Nick Mowb has an aver 6% ($216,000 With an $251,000, th Grey,WestC Overall,t more settle have anave $1m, down

Extreme highs and lows

OneRoofeditorOwenVaughan said unease in thewider economyand thedevastation caused by CycloneGabrielle hadput adentinthe volume of newstock comingontothe market.

“Total listings forNew Zealandon OneRoof.co.nz in Marchwereup2.23% month-on-month andup23.26% year-onyear,but newlistingsnationwide were down 17.09% year-on-year. Theworst-hitregions fornew listings were Hawke’sBay,down33% year-on-year, andGisborne, down 53%. New listings forAucklandfell23.59% year-on-year whilethe declineinCanterburywas just 8.55% but28.23% in Wellington

“For sellers, theyear-on-yearriseintotal listings will put furtherdownwards pressure on prices. However, thefactthatnew listings aredownsuggeststwo things. First,new sellersare holdingoff until themarket improves. Second,the decrease in newstock couldend up limiting therateofthe house price decline, by increasingthe competition forlistedproperties.

Vaughanaddedthatthe last threeyears had conditionedKiwis to expectextreme highs andlowsinthe housingmarket, amind-set that couldhamperperceptionsoffuture growth,whenithappens.“he last threeyears were notnormal. It wasn’t normal to see sales of $2m-plusinOtahuhuand Otara, in South Auckland,and it isn’tnormaltosee price dropsofaround$1m in thosesamesuburbs. When prices do pick up thepercentage changeswon’t be huge,and that will be frustrating for some. ”

WayneShum, seniorresearchanalyst at Valocity,saidmortgageregistration figures showedthatthe post-holiday drop-off in Januarythisyearwas more severe than in 2021 and2022. “Thereisanexpectation that values will continue to fall this year,hence buyers are cautious This wasfurther exacerbated by the weatherevents, whichdelayed marketing and settlementactivities andhas therefore affected mortgage registrations, whichreached anew two-yearlow

“Nationally, therewas aslight recovery of first-home buyers from 40.5%to41.3%, howeverinvestors aredownfrom 24.5% to 23.6%ashigherinterestrates have made it more difficultfor purchases to be cash neutral.

Shum said therewas still mortgage hurt to come forborrowers whoare still sitting on ratesat3%and lower. “While reduced property prices means alower depositis required,higherinterestrates mean higher repayments. Forinvestors,thismay mean negative cash-flow andserviceability concerns.”