New Zealand's house prices fell nearly 5 percent in July and the annual figure dropped for the first time in more than a decade as higher interest rates and tighter lending conditions bite, the Real Estate Institute (REINZ) says.
The median nationwide house value fell 4.7 percent from June to July (2.8 pct after seasonal adjustment) and was down 1.8 percent year on year - the first annual decrease since July 2011.
According to the REINZ, residential property sales decreased by 36.7 percent to 4678 in July, from 7391 in the same month last year.
"While the median property price is showing an annual decrease, affordability remains an obstacle for many - which is now being driven by rising interest rates, inflation and tighter lending criteria," REINZ chief executive Jen Baird said.
In Auckland alone, the median price decreased 5.6 percent compared to July last year from $1.2 million to $1.1m.
Auckland also recorded a month-on-month decrease of 4.3 percent - down from $1.15m in June.
Nelson was the region with the strongest annual growth in July. Median prices jumped 16.3 percent from $688,000 to $800,000.
The Taranaki region also had strong annual growth - up 15.9 percent from $535,000 to $620,000.
But another four regions on top of Auckland logged annual decreases in median prices including Wellington (down 5.9 percent) Tasman (4.6 pct) Otago (3.7 pct) and Manawatu/Whanganui (0.2 pct).
Baird said the housing market performance was weaker than expected.
"Real estate markets are cyclical [and] after a period of strong upward movement, it is slowing," she said. "However, prices tend to decrease more slowly than they increase and after a period of stability, the market tends to regain momentum and median prices start their climb. We are in the easing part of the market cycle."
She warned rising interest rates, inflation and supply chain issues would keep contributing to market volatility.
"In the current market, inflation, interest rates and access to finance are seeing buyers show caution and the pool of buyers able to buy unconditionally has decreased," Baird said. "We are seeing more contracts subject to sale or subject to finance, and buyers are increasingly confident entering negotiations. This shift has seen the number of vendors opting to go to auction and the number of buyers attending auctions decline."
