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Market Update: Downturn Heats Up
MARKET UPDATE:
PROPERTY PRICES SLIDE AS HOUSING
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MARKET DOWNTURN heats UP
The downturn in the housing market has widened and deepened, with the majority of New Zealand’s suburbs recording a drop in property values in the past three months, new research shows.
The latest update from CoreLogic NZ’s interactive Mapping the Market tool shows 803 of the 955 New Zealand suburbs analysed recorded a fall in median values between June and September.
CoreLogic NZ’s Chief Property Economist Kelvin Davidson said the latest results confirmed the extent of the housing downswing and how much it had accelerated each quarter in 2022.
“We’ve seen signs of weakness gathering pace this year as the lagged impact of rate rises, inflation, and other economic influences catch up with the market,” Davidson says.
“The winter momentum was most certainly downwards across the country, with the main centres hit hardest. The direction the cycle has been moving in shouldn’t come as a surprise to anyone.”
In Auckland, 97% of suburbs recorded a fall over the past three months, with 14 suburbs seeing median values dropping by 5% or more, including Glen Eden, Papatoetoe, Henderson, and Panmure.
Davidson says seven Auckland suburbs experienced falls of $100,000 or more, all of which were ‘upper end’ areas where median values are at least $2 million, including Omaha, Shamrock Park, Onetangi, Palm Beach, Herne Bay, Oneroa, and Orakei.
However, there were Auckland suburbs that defied the downward trend, including the North Shore’s Campbells Bay, where prices were up 6.5% to $2.48 million. The current median value in Epsom is $2,403,650, a decrease of 2.9 percent, according to the data. In Three Kings the median value is $1,259,800, a decrease of 1.5 percent, in Mount Eden the median value is $1,921,100, a decrease of 2.6 percent, in Parnell the median value slid 2.4 percent to $2,082,400, in Greenlane the median price dropped 1.5 percent to $2,062,950, in Remuera the median price fell by 2.1 percent to $2,705,500, in Newmarket the price dropped 2.4 percent to $874,500, Ellerslie dropped 4.6 percent to $1,368,700, and Mission Bay decreased by 3.2 percent.
“The rise in mortgage rates over the past year means new borrowers can’t get as much finance, and existing borrowers have to adjust too,”
Davidson says while the property market has “short-term challenges ahead”, “there were also potential green shoots for next year”.
“But there’s also now a sense of light at the end of the tunnel given the low unemployment figures and forecasts that mortgage rates could potentially be close to a peak. People are adjusting to the new norm, and it wouldn’t be a surprise to see the market trough in the first half of 2023.”
Announcing Ray White’s new concierge service, Ray White Chief Economist Nerida Conisbee said Kiwi buyers have a depth of choice in the market right now.
“Our data shows us the number of properties on the market is more than 90 percent higher than this time last year,” she said.
“So, not only is there more choice for buyers but in some areas, housing has also become more affordable. The median sale price for New Zealand has eased 14 percent since the peak in November 2021 and is now back to where it was a year ago. It is getting easier for people to get into the market,” Conisbee says.
Meanwhile, Davidson says the financial hurdle that comes with upgrading to a property with more bedrooms has shrunk in some areas in Auckland, with the gap in median values between three and four-bedroom properties starting to drop.
The “news is broadly positive” when you compare the trade-up premium seen this year to what was seen last year.
“Last year’s momentum has certainly vanished, with all key areas seeing a smaller rise in the tradeup premium over the past 12 months than in the previous period – consistent with the change in wider market conditions we’ve seen lately,” he says.
The trade-up premium had been shrinking over the past year in Auckland City, Waitakere, Manukau, Wellington City, and Dunedin.
“The margin is still about $400,000 or more in areas such as Auckland City and Manukau, but at least it’s fallen,” Davidson says.
“This reinforces the fact that most people ‘buy and sell in the same market’ and a wider downturn can sometimes be a good time to try and climb the ladder.”
