New OneRoof-Valocity, CoreLogic reports out today: House value declines measured

Data out today from two sources shows a quarterly 0.9 per cent fall. Photo / Fiona Goodall Photography

National house values have fallen 0.9 per cent in the latest quarter, according to two new reports out today - with even higher drops in some of our biggest cities.

OneRoof-Valocity and CoreLogic found residential property values in the quarter to the end of May down by precisely the same amount - 0.9 per cent.

OneRoof-Valocity said Auckland values were down 2.2 per cent or $34,000 in the quarter, Wellington down 2.9 per cent and Dunedin values fell 2.2 per cent.

James Wilson, head of valuations at OneRoof's data partner, Valocity, said: "Weaker market conditions are now evident across much of the country and across many property types. FOMO is most definitely gone, replaced by FOOP – fear of overpaying."

CoreLogic found widespread house price falls. Its index showed New Zealand down 0.9 per cent in the latest quarter. Wellington values showed the steepest decline, down 4 per cent. Auckland values fell 1.8 per cent, Hamilton 3.8 per cent and Dunedin down 2.3 per cent.

The quarterly fall of 0.9 per cent is the biggest drop over a three month period since the end of 2010, when the market was still in recovery mode from the Global Financial Crisis, CoreLogic said today.

Nick Goodall, CoreLogic research head, said the declines were particularly noticeable in the main centres.

But over a longer time frame, values were up.

Annually, national values rose 15.3 per cent to $1.02m, Tauranga rose 21.7 per cent to $1.18m, Auckland rose 16.4 per cent to $1.4m, Christchurch rose 24.5 per cent to $763,000 and Dunedin was up 7 per cent to $691,000, CoreLogic found.

But over the shorter time frame, numbers declined.

Valocity's Wilson said of the 984 suburbs and towns that registered 20 or more sales in the last 12 months, 488 had declines in their average property value.

House prices in a further 123 suburbs were below November levels, while house prices in four suburbs - Auckland Central, Meremere, Oriental Bay, Newmarket - were cheaper now than they were 12 months ago.

OneRoof editor Owen Vaughan forecast further declines. "The biggest concern for those who bought at market peak is whether or not their property is worth less than what they paid for it.

"For those who plan to be in their home for a long period and can repay their mortgage, negative equity won't be a pressing issue, but rising interest rates and cost of living pressures will put the squeeze on homeowners and the safety valve of being able to sell in a rising market is no longer there," Vaughan said.

CoreLogic's Goodall raised concerns about some people's ability to services mortgages. In some cases, the new interest rate being secured could be above the serviceability rate they were tested at, which bottomed out at 5.5 per cent in the middle of 2021.

"This will require some severe tightening of other spending which is expected to eventually slow inflation, but also has the potential to weaken economic growth more broadly, to the point where a recession is being talked about as being more likely," Goodall said.

The latest update to the CoreLogic forecast of residential sales volumes brought to light the reality of how much and how fast conditions are changing in the property market.

CoreLogic expects 78,000 sales this year, a big reduction from the 92,000 forecast only three months ago.

The change was mostly driven by the sharp increase in interest rate expectations which impact the number of money people can borrow and will further slow the market.

"Not only will agents be budgeting for less income, there's also a broad range of industries and professions intertwined with the real estate industry and the transactions within," Goodall said.