New Zealand property values fell 0.3 per cent over January, continuing a downward trend that’s lasted 10 months.
Values are now 7.2 per cent lower than they were 12 months ago, according to CoreLogic’s House Price Index.
That’s the largest 12-month decline since May 2009, when values fell 7.9 per cent.
CoreLogic New Zealand Chief Property Economist, Kelvin Davidson said recent pessimistic economic predictions meant the latest batch of price falls was expected.
“Some green shoots of optimism had started to emerge in September and October last year on the back
of a view that mortgage rates may have been at or close to a peak leading to some slightly stronger
offers being made around that time,” Mr Davidson explained.
“But then in November the Reserve Bank released its gloomy outlook for both the economy and
inflation for 2023, which was always likely to impact property values in the following few months.”
Values fell across five of New Zealand’s six major centres, according to CoreLogic.
The largest decline was in Christchurch (down 1.1 per cent) while values in Tauranga increased by 0.4 per cent.
Mr Davidson said that, outside of the major centres, market performance was more inconsistent.
“Gisborne, Whanganui, New Plymouth, Queenstown and Invercargill all saw average property values rise in January, whereas Hastings fell 1.9 per cent and Nelson’s decline wasn’t far short of the 1 per cent mark,” he said.
“Some areas have also recorded an increase over the past three months, most notably Gisborne (2.3 per cent) and Invercargill (1.4 per cent), while only Palmerston North and Hastings have seen falls of more than about 1 per cent.
“The variability is quite stark on the 12-month comparison, with Palmerston North, Hastings, and Napier
all seeing declines of 10 per cent or more, but Gisborne holding broadly flat, New Plymouth up by 2 per cent, and Queenstown still resilient with an 8.3 per cent rise.”
No sign of panic-selling
Despite the generally gloomy outlook for New Zealand property values, Mr Davidson said there were few signs of home owners panicking.
“Admittedly, we’re not seeing any real evidence yet that home owners are looking to ramp-up their
selling activity – with unemployment still low, they can generally sit on the market for as long as it takes,
or just de-list,” he said.
But New Zealand remained a buyer’s market for now, he added.
“But at the same time, buyers in a comfortable borrowing position still hold the balance of
power when it comes to pricing, and this has clearly driven a further leg down for values in January.”
New Zealand’s recent change of prime minister had yet to make any impact on the market, Mr Davidson said.
The General Election, set for October 14, was more likely to have an impact on property sentiment, he said.
“No doubt some existing and would-be property investors will be hoping for a National victory and a follow-through on their promise to reverse Labour’s Brightline and interest deductibility changes,” he said.
“But as the old cliché goes, there’s nothing guaranteed in politics.”
Mr Davidson said that what happened next with mortgage rates, migration and the labour market would likely dictate how much longer property prices continued to decline.