Property prices declining in many parts of the country

New Zealand's median property price fell another 0.5% in August, according to CoreLogic.

That was the sixth consecutive monthly decline, during which prices have fallen 3.7%.

 

The median price is now $811,583, which is about 17% above pre-COVID levels but also about 17% below the January 2022 peak.

 

This property decline is broad-based: over the past three months, prices have fallen in Auckland (by 3.3%), Wellington (2.1%), Tauranga (2.1%), Hamilton (1.9%), Dunedin (1.7%) and Christchurch (0.3%).

 

Supply, demand and affordability

CoreLogic Chief Property Economist Kelvin Davidson said the property market was facing several headwinds.

 

“No doubt many households will be feeling happier now that the official cash rate is falling and mortgage rates are headed lower too. This sentiment effect, as well as the direct boost to borrowers’ finances, could support housing in the near term. Yet the latest, actual fall in values is a timely reminder that the market still faces considerable challenges too,” he said.

 

“For a start, housing affordability is still stretched, while at the same time the labour market downturn is fully underway. Even if people haven’t lost their jobs, the increased feelings of insecurity will still tend to flow through to less enthusiasm to trade property or pay top-dollar. 

 

“It’s also clear that the bargaining power lies with buyers in a market where the stock of available listings is sitting at multi-year highs. But that’s still only for the more limited pool of buyers who can actually secure the finance. 

 

“This all adds up to likely further restraint on property values in the coming months, although the potential impact of lower mortgage rates can’t be ignored.”

 

Good news for buyers

It’s possible that lower interest rates will trigger a property rebound (see earlier story). However, in the here and now, prices are actually falling, as Mr Davidson notes.

 

That’s good news for buyers, because it means they face less competition, have more room to negotiate and have a greater chance of securing their dream home.

 

Please refer me to any buyers who want to take advantage of these conditions, so I can help them secure a home loan pre-approval.