Watch: For the first time in more than a decade, house prices have experienced an annual decline. Credits: Video – Newshub Images – Getty Images
The slump in the property market is continuing with the latest housing figures showing New Zealand’s first annual price decline in a decade, according to new figures released on Thursday.
The latest QV House Price Index shows prices slipped by an average of 2.1 percent nationwide in the 12 months to the end of September, which is the first annual home value reduction since June 2011. It also marks nine straight months of declining home values nationally.
The average home decreased in value by 5.4 percent nationally over the past three-month period to the end of September, with the national average value sitting at $956,592, which is 9.2 percent lower than at the start of this calendar year.
"The Reserve Bank’s decision last week to raise the Official Cash Rate (OCR) by another 50 points all but ensures the path we’re on will continue for the foreseeable future," QV General Manager David Nagel said.
"Interest rate rises, credit constraints, the increasing cost of living – it’s a sure-fire recipe for declining home values. Plus there are still new houses coming onto the market up and down the country, putting further downward pressure on prices almost everywhere."
Nagel said this will be "worrying news" for Kiwis around New Zealand who are looking to sell their homes and for those who purchased at the peak of the market, but he did have some positive news for first-home buyers.
"This market correction, as painful as it is for some, will hopefully afford others an opportunity to get into the market in the future," he said.
"Though it’s still very tough out there for prospective first-home buyers, they’re now gaining the upper hand when it comes to negotiations."
The majority of the regions around the country saw prices drop but Queenstown once again stood alone with a 0.2 percent quarterly home value growth, with all others continuing to succumb to tight credit conditions and rising interest rates.
Wellington was also hit hard with the region’s rate of quarterly home value decline almost hitting double figures at 9.6 percent last month, with Tauranga its nearest competitor at 7.7 percent.
"The usual spring bounce in activity in the residential property market hasn’t eventuated to the same degree as it has in previous years, but there are still plenty of active buyers out there, and deals are being done despite so much uncertainty," Nagel said.
"Large volumes of listings are giving purchasers plenty of choices and negotiating power, but it certainly looks as though sellers may still be in for a rough ride yet."
The home values of New Zealand’s biggest city have continued to decline by an average of 2.4 percent across the wider Auckland region in the 12 months to the end of September, the new figures have shown.
It follows eight straight months of negative home value growth, including an average of -5.8 percent in the most recent quarter with the average home value in the region now sitting at $1,358,710.
Every Auckland district recorded negative home value growth this quarter, with Rodney (-6.9 percent), Auckland city (-6.6 percent) and Waitakere (-6 percent) experiencing the largest declines in the three months since the end of June this year.
The dropping house values have hit the Waikato region with Hamilton slipping into negative annual home value growth for the first time in more than a decade.
The city’s average home value dropped by 2.4 percent to $841,089 in the 12 months to the end of September, including a 2.5 percent reduction in the most recent quarter.
It’s the first time since August 2011 the QV House Price Index has shown an average decline in home value in Hamilton over a year-long period.
The Wellington region wasn’t excluded from the drop with the area experiencing another "notable decline" in September, with home values falling by an average of 3.1 percent.
The wider Wellington region’s annual rate of negative home value growth is well into double figures now at 14.2 percent, with its quarterly rate of decline at 9.6 percent.
The new figures showed the average home value in Wellington is $903,259, which is now 16.9 percent lower than at the start of this calendar year.
Home values in the Canterbury region have continued to decrease but not at a great pace with the latest QV House Price Index recording just a 1.1 percent decline for the calendar year, a 2.3 percent drop this quarter, and a 0.6 percent decline last month.
The average home value in Christchurch reduced by 0.6 percent last month to $764,150, marking five straight months of negative growth.
The average rate of home value decline slowed in Dunedin last month with the latest figures showing the city’s average home value ($646,228) reduced by 4.6 percent this quarter, and by 0.7 percent in September.
This is an improvement on respective losses of 6.7 percent and 1.4 percent reported last month.