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
First-home buyers finally have a better chance to get into the market after national house prices fell $40,000 in just one month and Auckland's were down $50,000.
Jen Baird, Real Estate Institute chief executive, said: "Agents across the country report they are starting to see demand return from first-home buyers."
Fast price drops since November were allowing those at the lower end to get a crack.
The national median house price was $810,000 in July, down from $850,000 in June.
Auckland's median price was $1.1m, down from $1.15m in the same time period, the Real Estate Institute said.
North Shore prices fell from a median $1.37m a year ago to $1.34m in June, Auckland City prices went from $1.3m to $1.2m and Waitakere from $1.1m to $1m.
Hamilton's median dropped from $825,500 last June to $790,000 last month. Tauranga went from $930,000 to $925,000 last month, while Rotorua fell from $640,000 to $635,000.
National stock volumes more than doubled annually: the total number of properties available for sale rose 107.8 per cent from 12,684 last July to 26,358 last month.
For New Zealand excluding Auckland, inventory increased 128.8 per cent from 6875 to 15,732.
But monthly sales numbers continue to fall 15.8 per cent in Auckland from 1685 July sales to 1419 in August and 4 per cent nationally from 4874 to 4678 sales.
Across New Zealand, residential property sales decreased annually by 36.7 per cent, from 7391 last July to 4678 last month.
Not as many houses selling these days. Photo / Fiona Goodall Photography
The REINZ House Price Index is now down 7.1 per cent annually and the median number of days to sell a house shot from 13 to 45 in Auckland and from 16 to 47 nationally.
Just 458 properties sold nationally by auction last month, which was 9.8 per cent of overall sales compared to 26.1 per cent a year ago.
That's the lowest percentage of auction sales in more than two years, REINZ said.
Baird said: "After a period of strong upward movement, it is slowing. However, prices tend to decrease more slowly than they increase and after a period of stability, the market tends to regain momentum and median prices start their climb. We are in the easing part of the market cycle."
Rising stock for sale was not the result of distressed vendors, she said.
High employment rates and bank lending conservatism supported the ability for homeowners to handle rising interest rates, she said.
"It is because buyers have stepped back, some deterred by successive initiatives to dampen investor appetite, others hampered by changes to the Credit Contracts and Consumer Financing Act and reintroduction of LVRs."
Nine regions had more than twice the inventory of a year ago. For eight consecutive months, Wellington and Manawatu/Whanganui was in that situation because the number of houses for sale rose 171 per cent and 144 per cent.
Hawke's Bay's inventory rose the most: 192 per cent, Nelson's was up 187 per cent, the Bay of Plenty 170 per cent, Waikato 164 per cent, Gisborne 131 per cent, Taranaki by 117 per cent and Northland 117 per cent.
Prices had stayed up in more affordable regions compared to larger markets like Auckland and Wellington, Baird said.
"Buyer demand remains intact in Canterbury, and specifically Christchurch, reflected in the region's strong performance over the past months. On the other hand, the Wellington market hasn't fared so well.
"According to local agents, the number of attendees at open homes has fallen, days on the market have increased to 61 days in July and sales activity has eased. Stock is staying on the market for longer and the properties selling are those where vendors have met the market."
Prices fell from their November peak. Many vendors were adjusting expectations to meet the market, Baird said.
ANZ Research said house prices continued to decline "and there's not much in the economic outlook that will stop that.
"In fact, we're forecasting that the economy will sail pretty close to recession over 2023 as rapidly rising interest rates flow through to outright falls in household consumption, business investment, and residential construction activity."
The only saving grace is we should see the return of our largest export - international tourism - which should keep the headline growth numbers positive.
"But a shrinking domestic economy is hardly a supportive environment for house prices. We are also anticipating that this domestic economic weakness will flow through into higher unemployment and lower wage growth, albeit with a lag.
"At the margin, that's another key support for the housing market that is likely to weaken in time," ANZ Research said today.
Kiwibank's economics team said another cold front blew through the housing market in July.
Sales were 36.7 per cent lower on last year, and the REINZ house price index fell 3 per cent which was the first annual fall since 2011.
"The first annual fall in prices might seem a shock, but it means prices have only fallen to levels seen in May last year.
"Nevertheless, house prices have further to fall in the current cycle, as credit condition remain tight, and confidence is lacking. We're picking a fall of 10-11 per cent in the REINZ HPI by the end of the year," Kiwibank's economists said this morning.
Quotable Value this week said houses had dipped below the $1m mark for the first time in nearly a year.
Rising interest rates, credit constraints and inflationary pressures caused the drop below $1m for the first time since last September.
