The downturn in the property sector is gathering pace but is unlikely to turn into a full blown collapse, according to the head of the country’s biggest valuation firm.
Quotable Value said the fall in prices was getting more pronounced at the top and bottom of the market, with the top 25 percent most expensive properties falling an average 1.2 percent and the 25 percent least expensive homes averaging a 1.7 percent decline in the three months to the end of April.
The average house price fell 1 percent during the quarter.
QV general manager David Nagel said it was the first time in two years the top of the market had recorded no value growth and even longer since it had last posted a loss, while it was the first loss at the bottom in more than two years.
He said rapidly rising interest rates, affordability constraints and much tougher lending rules were now taking a toll on all parts of the market.
“What we’re seeing now is a growing number of main centres experiencing declining home value levels at both ends of the market. Those losses are starting to mount, month to month, up and down the property ladder.”
The fall was the largest in Papakura’s lowest priced properties, which fell 10.8 percent, followed by Dunedin’s cheapest down 8.1 percent, with an 8.2 percent fall in Hutt City’s most expensive houses.
Nagel said there had been a swift turnaround in the market since the end of last year.
“Back then, none of New Zealand’s main centres were showing any negative growth whatsoever; now most of them are, with the few exceptions most notably Whāngarei, Christchurch, and Invercargill likely to join them in the coming months.”
He said he had not seen such a rapid turnaround in the market in more than 30 years, and did not think it was over.
“This residential property rollercoaster still has a way to go.
“While it’s difficult to see things getting better any time soon, the likelihood of a collapse in property values remains relatively low,” Nagel said, adding that the market has only retraced to where it was towards the end of last year.