This month has been an absolute shocker for New Zealand’s housing market.
Last week, QV released its house price index for August, with values nationally plunging 5.5% over the quarter.
Then the REINZ House Price Index suffered its largest six month decline since records began in 1992.
Now CoreLogic has released its interactive Mapping the Market tool, which shows the “housing market downturn is in full swing” with values falling across 84% of New Zealand suburbs in the three months to August.
Specifically, 803 of 955 suburbs nationally recorded quarterly price falls. This was led by Auckland, where 97% of suburbs (194 out of 201) declined in value.
Commenting on the results, CoreLogic NZ’s Chief Property Economist, Kelvin Davidson, said the housing downturn has “accelerated each quarter in 2022”:
“We’ve seen signs of weakness gathering pace this year as the lagged impact of rate rises, inflation and other economic influences catches up with the market”.
“The winter momentum was most certainly downwards across the country, with the main centres hit hardest. The direction the cycle has been moving in shouldn’t come as a surprise to anyone.”
Davidson expects prices to continue falling in the short-term as the impact of the Reserve Bank’s aggressive rate rises bite. However, he believes prices will probably bottom in the first half of 2023:
“The rise in mortgage rates over the past year means new borrowers can’t get as much finance, and existing borrowers have to adjust too”.
“But there’s also now a sense of light at the end of the tunnel given the low unemployment figures and forecasts that mortgage rates could potentially be close to a peak”.
“People are adjusting to the new norm, and it wouldn’t be a surprise to see the market trough in the first half of 2023.”
New Zealand housing is among the most expensive in the world after experiencing one of the strongest growth phases over the pandemic.
It, therefore, stands to reason that New Zealand will experience one of the largest housing declines amid the global lift in interest rates.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also Chief Economist and co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
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