As house values record their biggest fall in 14 years and real estate agents see sales decrease, experts explain how the power is returning to buyers. Video / NZ Herald
They rose fast, now they’re falling fast.
Auckland house prices, up 24 per cent last year, have now fallen annually by just over 18 per cent or $235,000.
Real Estate Institute numbers for November show the city’s house prices fell 18.1 per cent from the end of November 2021 to the end of last month.
That compares to a national annual house price drop of 12.4 per cent from $925,999 to $810,000 in the same period.
So just like Auckland prices rose faster and more than other parts of the country, the city is now feeling the downturn more than many other areas.
Today, REINZ took a glass-half-full approach on Auckland’s $235,000 drop, highlighting the fact that the city’s prices still remained high compared to elsewhere.
“The City of Sails is also known for its expensive house prices — even after a year of easing prices, its median price continues to surpass $1m.”
Buyers in all price categories are finding it harder.
Auckland house prices from 2004 to November 2022. Data / supplied by REINZ
“Typically, owner-occupiers have been the most active buyer group across the Auckland region,” REINZ said.
“Backed by equity, securing finance is not as much of a barrier for current owners. However, Auckland salespeople report a lighter presence across all buyer groups, largely due to rising interest rates, inflation, and low consumer economic confidence.”
Auckland landlords aren’t as active as they were.
“There is a feeling of frustration amongst property investors who have pulled back from the market due to legislation impacting their willingness to enter the market,” REINZ added.
“For many, falling yield and capital gains mean investment is no longer attractive. Many other regions report an increase in Aucklanders in their markets as housing affordability remains a challenge and flexible working enables people to live and work remotely.”
Graph supplied by the Real Estate Institute.
Auckland City prices fell from last November $1.54m to $1.19m, Franklin from $973,999 to $900,000, Manukau from $1.23m to $1.05m, North Shore $1.55m to $1.29m, Papakura $1.13m to $1.22m and Waitakere from $1.19m to $920,000.
Barfoot & Thompson data for November out at the start of this month showed Auckland and Northland unsold residential properties hit a 12-year high last month, with 5052 listed but yet to find buyers.
Last year’s average sales were 1119 but in November, the agency only sold 700 places.
The agency’s average number of properties for sale during any one month last year was just 3353. In 2020 it was 3759.
But it has a swelling number of available listings.
The previous record was set in February 2011 when the agency had 6053 properties for sale. That year, it had more than 5000 listings at the end of March, April, May and November.
But in more buoyant times lately, the agency had fewer places to sell as demand soared partly due to historically low interest rates.
November’s median sales price fell 2.4 per cent from October’s $1,092,500 to $1,065,000.
“Property is selling, albeit at a level lower than at the same time last year,” managing director Peter Thompson said at the start of December.
REINZ said today other drops were recorded annually in the Hawkes Bay where prices are down 17.2 per cent, Wellington’s down 17.4 per cent, the Bay of Plenty down 3.7 per cent and Northland down 2.7 per cent.
Gisborne was down 3.6 per cent, Waikato down 7.4 per cent, Taranaki down 1 per cent and Manawatu/Whanganui down 8.2 per cent, Canterbury down 3.2 per cent and Dunedin down 6.2 per cent. Hamilton prices fell from $881,000 a year ago to $790,000 last month, Tauranga’s from $1m to $902,000 and Napier’s from $830,000 to $723,000.
Sales volumes fell nationally 12.4 per cent annually.
The REINZ House Price Index fell 13.7 per cent annually. At the end of November, 28,449 properties were for sale, up 47.7 per cent.
Listings were down 26 per cent annually to 10,185. All regions saw listings decrease compared to November last year, although Marlborough’s remained static.
The median number of days to sell a property in November was 41, up 12 days annually.
The market peaked last November 2021, REINZ said.
ANZ Research said: “The housing market continues to soften, with the pace of monthly price declines intensifying in November. That’s a little bit surprising given these data largely pre-date the hawkish November monetary policy statement. Prices are now around 14 per cent below their November 2021 peak. We maintain our forecast for a peak-to-trough decline of 22 per cent.”
Westpac IQ said today: “The already-beleaguered housing market took a fresh leg lower in November. Sales [nationally] fell another 7.7 per cent in seasonally adjusted terms, bringing them closer to the lows seen in the wake of the 2008 Global Financial Crisis. Prices fell by 2.2 per cent for the month, the biggest monthly decline that we’ve seen so far in this downturn.”
Kiwibank Economics said house sales were continuing to power down as mortgage rates charged higher. The market was paying for past excesses, it said.
Tony Alexander, an independent economist, has forecast the floating mortgage rate could go as high as 9.5 per cent by mid-way through next year.
Popular one and two-year fixed mortgage rates are likely to stay higher for longer.
Picking where interest rates would go was a mug’s game, Alexander says, but he thinks when interest rates start declining, the fall-off will be relatively slow because he does not see a deep recession like 2008/09 or like that during the Asian financial crisis of 1997/98.
