Property market now experiencing downward pressure on prices
New Zealand's median property price fell 0.9% during the June quarter, to $916,285, according to property valuation group QV.
The national median remained 2.8% higher than in June 2023 but 13.9% lower than the market’s peak in late 2021.
Focusing on individual locations, values fell 2.6% in Auckland during the June quarter, 1.3% in Tauranga, 1.3% in Palmerston North, 1.2% in Wellington and 0.9% in Nelson.
However, prices rose 1.3% in Dunedin, 1.2% in Rotorua, 1.0% in Invercargill%, 0.9% in Marlborough and 0.9% in Hastings.
Buyers and sellers facing challengers
QV Operations Manager James Wilson said buyer competition was limited, which was leading to a stagnant market.
“Tough economic conditions are continuing to make it extremely difficult for potential purchasers to save a sizeable deposit for a home, secure finance from the bank, and service a mortgage with interest rates currently sitting around 7% and onshore inflation still biting,” he said.
“Many house hunters are in hibernation now until conditions improve, potentially on the other side of winter, maybe longer. As a result, downward price pressure has spread across all segments of the market now, with investors, owner-occupiers and even first home buyers – still the most active group in the market today – all taking a noticeable step back as we pass the halfway point of the year.
“An abundance of listings is also having a cooling effect on the market, reducing remaining competition and therefore flattening growth across much of the country.”
Meanwhile, sellers were having to be increasingly patient, according to Mr Wilson.
“Many residential property sales are now conditional on other sales occurring. This has been causing chain reactions in many instances, which is often extending sales periods or causing deals to fall over altogether. Sellers are also having to adjust their price expectations in what has increasingly become a buyers’ market, albeit a pretty quiet one,” he said.
The benefits of buying in this kind of market
Mr Wilson forecast that prices would remain soft for the foreseeable future.
“There’s currently nothing to suggest that house prices will take off again in the near future, while there’s everything to suggest that they will remain flat to gently falling. The recent shortening of the bright-line test will likely result in more listings coming onto the market, offering buyers even more choice and therefore keeping downward pressure on prices,” he said.
Buying in a competitive market is hard, because homes sell quickly and prices keep rising. But buying in this kind of flat market tends to be easier, because there's less buyer competition and you don't have to rush into a decision. Please contact me if you're thinking about purchasing a property in 2024, so I can secure a home loan pre-approval for you.