House prices plunged 12.2 percent in the year to December, with the median sale price at $790,000, according to the latest Real Estate Institute of New Zealand (REINZ) data.
The REINZ's House Price Index showed an annual decrease of 13.7 percent in the value of residential property across the country, which it says is in line with the sale price changes.
Buyer caution is clear in a falling number of sales, down a massive 39 percent between December 2021 and December 2022. The sales count fell 23.6 percent between just November and December last year, the figures show.
"We usually see a slowing of activity as we head into the festive season, and we are comparing this December to one that was right at the peak of the pandemic market," said REINZ chief executive Jen Baird.
"Comparing this activity to the long-term trend, we can see the current market is weaker than this trend. This is leaving a lot of choice for buyers with a 55.3 percent increase in inventory - now sitting at 26,057 properties."
Properties are sitting on the market longer, REINZ data also shows. In December 2022, the median number of days to sell was 40 days, 11 days longer than a year prior.
Baird said a key reason buyers may be taking their time is the recent rise in interest rates.
The Reserve Bank has been aggressively hiking the official cash rate (OCR) to combat spiralling inflation. In November, the central bank projected the OCR to hit 5.5 percent this year, the highest it will have been since 2008.
Baird said the combination of cheaper prices and high inventory means sellers "have to be realistic about their price and timing expectations".
Most regions saw median house prices fall year-on-year, other than Taranaki (up 5.1 percent), Northland (up 3.3 percent) and West Coast, which saw no change. Wellington recorded the biggest percentage decrease, down 20.2 percent.
Auckland continues to have the highest median house price at $1,050,000, but was down 18 percent. The region with the lowest median house price in December was West Coast at $370,000.
"Salespeople around the country say sellers are tending to be more realistic and will usually meet the market through negotiation - although it’s taking longer to sell, sellers are still getting results," said Baird.
“If you can make the finances work, this is a good time to be a buyer. More stock, less competition and prices continuing to ease, will allow those who can get all the ducks in a row to buy well."
