New Zealand's residential property downturn continues to decelerate, with the nation's three-month rolling rate of decline reducing for the fourth straight month.
The QV House Price Index for July 2023, released on Tuesday, showed the average home decreased in value by 1.5 percent nationally this quarter, which is a smaller rate of decline than the 1.8 percent change experienced back in June, and considerably lower than the 3.5 percent and 3.4 percent quarterly declines experienced back in April and May respectively. The national average now sits at $888,999.
That figure is now 10.2 percent less than the same time last year, but just 0.3 percent lower than at the end of June. Just four of the 16 main urban areas QV monitors recorded small amounts of positive home value growth in the three months to the end of July nationwide: Hamilton (0.1 percent), New Plymouth (0.4 percent), Christchurch (0.8 percent), and Invercargill (0.8 percent).
Home values continue to decline in Auckland (-1.5 percent) and Wellington (-1.7 percent), with the average rate of reduction increasing in Nelson (-2.4 percent), Whangārei (-1.4 percent), Queenstown (-1.3 percent), and Rotorua (-0.5 percent).
QV operations manager James Wilson said it wouldn't be unusual to see home values continue to yo-yo across the motu for the foreseeable future, largely as a result of reduced sales activity.
"Though low sales volumes continue to impact the monthly value change results significantly, causing some short-term spikes in average home value levels, the longer-term trend is pretty clearly a residential property market that is bottoming out after some very significant home value reductions over the last 18 months or so," he said.
"But it's still early days and we're unlikely to see the market reach a consistent bottom overnight. Instead, we're likely to see significant variations in performance in sub-markets across the country, as we see demand return in certain areas and for certain property types at different times. Meanwhile, that heightened level of volatility is set to continue until sales volumes increase further."
Wilson said first-home buyers remained the most active in the market, but investors were beginning to show some renewed interest generally.
"While investors never removed themselves from the market entirely, they have adopted more cautious attitudes in recent times. Now we're starting to see growing numbers competing for entry-level stock in areas they view as offering good value for money."
Auckland
Auckland's rolling rate of home value decline has eased for the fourth consecutive month.
QV said the region's three-month rolling average has reduced from 5.2 percent in March, to 4.4 percent in April, 2.3 percent in May, 2.2 percent in June, and now 1.5 percent in July. The average home value is now $1,243,610, which is 11.8 percent lower than at the same time last year.
Local QV valuer Hugh Robson said only time would tell whether or not the market was indeed bottoming out, but there were obvious signs that buyer sentiment was beginning to change.
"There appears to be a slight increase in sale volumes over the past four to five weeks. Agents say first-home buyers are still actively looking for property, but there is still a shortage of listings on the market across Auckland. This may result in some price movement in the coming months," he said.
"Investor demand is still fairly quiet overall. Mortgage rates remain high and rents are continuing to increase right across the city."
Tauranga
Home values continue to fall in Tauranga, but there are signs that market sentiment is shifting, QV said.
Values there have reduced by an average of 2 percent in the July quarter, which is a slower rate of decline than the 2.9 percent quarterly decline in the previous index. The average home value there is now $994,791, which is 12.3 percent less than the same time last year.
"There are further indications that the correction is coming to an end now and that the residential market is close to its low point. Sales turnover is starting to increase and value declines are decreasing," said QV property consultant Derek Turnwald.
"First-home buyers are realising that the market is reaching the end of a decline and are showing stronger interest. Banks are beginning to relax a little with loan application scrutiny and, as of 1 June, the Reserve Bank has relaxed Loan to value ratio criteria slightly for owner occupiers and investors."
He said investors were also starting to show renewed interest in the market.
Wellington
Wellington's rolling three-monthly rate of home value reduction has eased for the fourth month in a row.
The region's average home value has reduced by 1.7 percent to $824,100 this quarter. This marks a slight improvement on the 2 percent average reduction previously recorded for the June quarter, as well as reductions of 4.8 percent, 3.7 percent, and 2.6 percent in March, April, and May respectively.
Local QV senior consultant David Cornford said home values were on average 14.2 percent lower than at the same time last year.
"Value decreases in the region have slowed or even halted altogether this quarter, with Porirua and Upper Hutt both recording small value increases," he said.
"Lower listing numbers are helping to inject some energy into the Wellington property market with open home attendance up and more multiple offers coming in. If listing numbers continue to decline, it will help support a recovery in the market. However, given the high interest rate environment there is unlikely to be a significant bounce in values in the short term."
Canterbury
Despite a cold July for the housing market, Christchurch and the wider Canterbury region have recorded small quarterly home value increases for the first time in more than a year, QV said.
The average home value increased by 0.1 percent across the wider Canterbury region this quarter to $701,002, which is an improvement on the 1.3 percent quarterly decline seen in June. In Christchurch, the average home value increased by 0.8 percent this quarter to $727,209.
However, the Garden City and the wider Canterbury region did also have small declines in average home value of 0.4 percent and 0.5 percent respectively during the month of July, which QV said reflect high levels of volatility in the market.
"July has seen a slight decline in average home value. As to be expected, winter has cooled the market. While sales have slowed, a falling number of listings is actually stabilising the market overall and curbing any significant declines," said local QV registered valuer Olivia Brownie.
"With some uncertainty still to play out economically over the next few months, we expect some more inconsistency in the Canterbury market to follow."
Queenstown
Home values continue to zig and zag in Queenstown, QV said.
The average home value there decreased this quarter by 1.3 percent to $1,714,703, despite a small 0.2 percent increase in the month of July. It's in contrast to the 2.9 percent quarterly growth recorded back in June and the 2.4 percent quarterly growth recorded back in May.
Home values are still holding up there though, with an annual average growth rate of 3.8 percent, compared to a national average decline of 10.2 percent.
