Housing market slump has cost homeowners in Auckland more than $140,000

The average property value in Auckland tumbled 9.8 per cent since hitting a peak of $1.56 million at the start of the year. Photo / Getty Images

The housing market slump has cost homeowners in Auckland more than $140,000, the latest OneRoof-Valocity house value report shows.

The average property value in the city tumbled 9.8 per cent since hitting a peak of $1.56 million at the start of the year.

Homeowners in 57 Auckland suburbs have seen the value of their property drop more than $200,000 as rising interest rates and worsening inflation cause buyers to retreat from the market.

The suburb that took the biggest hit was Okura, a lifestyle suburb on Auckland's northern fringe. Its average property value has fallen $426,000 since market peak.

The average property value in Herne Bay, New Zealand's most expensive suburb, took the next biggest tumble, falling $355,000 since market peak to $3.835m.

Just three Auckland suburbs have been able to escape the downturn: Great Barrier Island (Aotea Island), Karioitahi and Coatesville.

The OneRoof-Valocity figures show the nationwide average property value fell $75,000 (6.8 per cent) after hitting a high of $1.09m at the end of February.

The biggest faller was Wellington. Its average property value fell $196,000 (17.7 per cent) to $1.103m since peaking in March.

Homeowners in neighbouring Lower and Upper Hutt also suffered steep declines, of $158,000 (18.7 per cent) and $149,00 (17.5 per cent).

Homeowners in Queenstown-Lakes were luckier with the average property value in the wealthy tourist town sliding just $21,325 (1.1 per cent) since reaching an all-time high of $1.88m in July.

Property values in Christchurch dropped $24,779 (3.1 per cent) since market peak in June, while values in Tauranga, Hamilton and Dunedin fell $92,000, $68,000 and $63,000 respectively from their market peak.

Of the 645 major metro suburbs with 20 or more settled sales in the past 12 months, only 24 are still registering value growth, most of which are in Queenstown-Lakes.

Figures from the OneRoof Valocity House Value Index show continued declines in 15 of the country's 16 regions over the past three months.

New Zealand's average property value dropped 3.7 per cent to $1.023m in the past three months, while year on year growth was a mere 0.7 per cent.

Only West Coast, New Zealand's cheapest housing market, recorded value growth in the three months to the end of September, but the 0.5 per cent rise to $407,000 shows the market slump is putting the squeeze on house values there too.

The biggest three-month declines were in Greater Wellington (-7.3 per cent), Nelson (-5.7 per cent) and Manawatu-Whanganui (-5.4 per cent). Auckland's average property value fell 4 per cent over the same period - and registered its first annual decline since July 2011, when values slid just under 1 per cent.

Real estate in Wellington - "the country's most troubled housing market", according to James Wilson, head of valuations at Valocity. Photo / Getty Images

Auckland property values were down 1.9 per cent year on year - a drop of $27,000. Also down year on year were: Wellington (-9.4 per cent), Manawatu-Whanganui (-2 per cent), Nelson (-1.3 per cent) and Hawke's Bay (-0.1 per cent).

James Wilson, head of valuations at Valocity, OneRoof's data partner, said: "Greater Wellington remains the country's most troubled housing market. Property values dropped in all eight of the region's territorial local authorities [TLAs] over the quarter, and homes in the capital are now worth $99,000 less than what they were a year ago.

"Cost of living pressures and strong signals from the Reserve Bank that further interest rate rises are on the cards have dampened buyer enthusiasm, and as long as supply continues to outpace demand, price growth is unlikely to return anytime soon. Continued falls over the quarter suggest the market hasn't hit the bottom yet."

Wilson said some smaller centres, where prices remain relatively low, were still seeing positive growth.

"Property values in Kaikoura, Opotiki, Westland, Thames-Coromandel and Hurunui were all up over the quarter. Some of these areas are popular among buyers seeking holiday homes, which bodes well for them as we head into spring and summer," he said.

The number of settled sales fells from 95,455 in the 12 months to the end of August to 93,847 in the 12 months to the end of September, while new listings have tracked behind levels in 2019 and 2020.

OneRoof editor Owen Vaughan said properties were taking longer to sell in the current climate, which had placed pressure on movers.

"Owners looking to list will understandably be nervous about where their property sits in the market right now and what method of sale they should choose. While auction clearance rates for 2022 are well down on the year before, when demand was at its peak, feedback from agencies highlights that auctions are still securing better and quicker results than other sales methods."

Wayne Shum, head of research at Valocity, said the number of mortgage registrations fell from just 6100 in July to just over 5300 in August - the lowest level since August 2021 when the country was thrust back into a hard lockdown following the outbreak of the Delta strain of Covid-19.

"First-home buyers were hit hard by the lending landscape and their share of market declined from over 40 per cent pre-Christmas 2021 to 36.7 per cent in March. However, lower property prices have helped first-home buyers' share recover to 39.7 per cent in August this year," he said.

"Approximately 55 per cent of mortgage holders who bought in the second half of 2020 and first half of 2021 are soon set to come off the low interest rates in the next 12 months and on to higher rates, which will reduce their spending power.

"The Reserve Bank increased the OCR by 0.5 percentage points in August, and is likely to do so again on October 5 and in November, in a bid to push down inflation, which is running at 7.3 per cent.

"Rental growth has stalled as interest rates continue to rise, which places greater cash-flow pressure on some investors. There is also an oversupply of some types of rental properties, which means rents are unable to be increased to cover shortfalls. Furthermore, it is more difficult to obtain interest-only mortgages, which some investors have previously relied on."

Wilson said rising construction costs and worsening supply chain issues would also have an impact on the market.

"Some developers will struggle to complete construction works due to labour and materials shortages, and rising costs of materials and borrowing. Sunset clauses may need to be exercised to cancel pre-sales contracts in these instances," he said.

"However, New Zealand's economy is in good shape and that, coupled with low unemployment levels, should bolster the property market."