New Zealand house prices have experienced their largest quarterly drop in more than a decade, with the main centres bearing the brunt of rising interest rates and tightening bank credit.
The QV house price index said the cities were the first to show the impacts of the house price downturn.
According to QV's data, the average home decreased in value by -0.6 percent nationally over the past three-month period to the end of March. This was down from the 2.3 percent rise in quarterly growth seen in February, with the national average value now sitting at $1,046,636. This is an average annual increase of 18.3 percent, down from 22.9 percent annual growth last month.
In the Auckland region, the average value now sits at $1,503,922, falling -1.5 percent over the last three-month period, with annual growth of 18.6 percent, down from the 23.2 percent QV reported in February.
"We're seeing quite a rapid decline in the rate of annual growth - especially compared to the early months of 2021, when the market was peaking," said QV general manager David Nagel.
"Now we're seeing much slower growth months and even some value contraction in early 2022. This is particularly prevalent in the main centres where some of the largest value increases over the past two years have occurred."
He said real estate agents have reported a bounce in sales volumes for March after a slow start to the year but levels were still down on previous years. This was mainly due to the recent rise in interest rates and changes to credit lending rules.
"With the massive rise in listings over the past couple of months the balance of power has shifted firmly into the hands of buyers, after such a prolonged period of it being a sellers' market."
Fourteen of the 16 major urban areas QV monitors showed a reduction in the rate of three-monthly value growth from their February data, with just Marlborough and Queenstown Lakes value levels holding firm with last month's quarterly growth levels.
"Last month we saw just two major urban areas register a reduction in value levels over the three month period to February but this month we've seen seven of the 16 areas showing a reduction in value levels," Nagel said.
"And if you look at just March in isolation, there are now nine of the 16 urban areas showing a value decline, including the main centres of Auckland, Hamilton, Wellington, Christchurch and Dunedin."
He added it's likely New Zealand will see a continued gradual decline in value levels for some of the locations that have had the greatest value growth recently, while the regions will likely continue to see a mix of stagnated growth over the coming 12 months.
Auckland
Home values have dipped -1.5 percent across the Auckland region this quarter, following two straight months of negative growth, QV said.
Papakura (-3.3 percent), North Shore (-2.3 percent) and Auckland city (-2.3 percent) saw the biggest quarterly declines, with Rodney standing alone as the only district in the Auckland region showing any significant home value growth at 1.4 percent over the past three months. n In the wider Auckland region, the average home value is now $1,503,922.
"The Auckland market has continued to slow down over the past 4-5 weeks, with a number of suburbs now showing a slight drop in price level," said local QV registered valuer Hugh Robson.
"This confirms the market has changed from what we experienced in 2020 and 2021. Bank interest rates continue to creep up and tighter Government lending rules continue to have an impact on the market."
He said in recent years, many of the sales across Auckland were to developers who were buying their next building site for redevelopment or investors who were land-banking.
But with this change in the market, along with a shortage of some building materials - several developers were sitting tight and delaying construction so they're not caught with brand new development and a lack of buyers.
But despite this, Robson said high prices were still being paid for premium properties in sought-after locations, such as waterfront properties in Herne Bay, Westmere and St Mary's Bay.
Wellington
Average home values have declined right across the greater Wellington region through the first three months of 2022.
QV said the biggest reduction in average home value has occurred in Hutt City, with the three-month rolling average currently sitting at -5.2 percent following four consecutive months of declines. But the average decline across the entire region is -1.5 percent, with values still up by 13.7 percent over the past 12 months.
QV senior consultant Blake Ngarimu said the stats showed a continuing fall in the market.
"It's now more evident that Wellington is becoming a buyers' market. Developers are reducing asking prices and properties are sitting on the market for longer and typically selling below or at asking price," he said. "It's a clear indication that the higher interest rates and tougher lending conditions, coupled with the increase in supply, are having an impact on the market."
Although the Government had given direction to soften lending rules on creditworthy borrowers in March, in wake of the dip in the market, Ngarimu said it was unknown if it would help ease the current dip.
"Open home attendance remains low, particularly at the lower end of the market, which is more heavily finance-driven. However, there has also been a significant increase in listings, giving buyers more options."
Canterbury
Home values have dipped for the first time in Christchurch since May 2020, which is just after New Zealand had emerged from a two-month COVID lockdown.
They dropped by -0.2 percent last month, with the three-month rolling average sitting at 1.8 percent, which is still well above the national average (-0.6 percent). The average home value in the Garden City is now $797,518, which is 32.4 percent higher than it was 12 months ago.
"Things have certainly cooled off, especially at the lower-value end of the market, with the city's more expensive home values still showing more strength," said local QV property consultant Olivia Brownie.
"The number of days to sell is increasing as more stock comes on to the market, therefore creating an environment where buyers can negotiate or take their time."
Home values increased by an average of 2.4 percent across the wider Canterbury region over the first three months of this year, with the Selwyn District leading the way with 6.1 percent. All Canterbury districts showed significantly less home value growth this quarter than over the last three months of 2021.
