House prices

The housing market crash has cost Auckland homeowners more than $140,000

The average property value in Auckland has fallen 9.8% since hitting a high of $1.56million earlier this year. Photo/Getty Images

The housing market crash has cost Auckland homeowners more than $140,000, according to the latest home value report from OneRoof-Valocity.

The average property value in the city has fallen 9.8% since hitting a high of $1.56 million earlier this year.

Homeowners in 57 Auckland suburbs have seen their property values ​​plummet by more than $200,000 as rising interest rates and worsening inflation push buyers out of the market.

The suburb that has been worst affected is Okura, a lifestyle suburb on the northern outskirts of Auckland. His average property value has fallen $426,000 since the market peak.

The average property value in Herne Bay, New Zealand’s most expensive suburb, has fallen $355,000 since the market peak at $3.835 million.

Only three Auckland suburbs were able to escape the crisis: Great Barrier Island (Aotea Island), Karioitahi and Coatesville.

Figures from OneRoof-Valocity show the average property value nationwide fell $75,000 (6.8%) after hitting a high of $1.09 million in late February.

The biggest faller was Wellington. His average property value has fallen $196,000 (17.7%) to $1.103 million since the March high.

Homeowners in neighboring Lower and Upper Hutt neighborhoods also suffered steep declines, of $158,000 (18.7%) and $149,000 (17.5%).

Homeowners in Queenstown-Lakes have been luckier, with the average property value in the tourist-rich town down just $21,325 (1.1%) since hitting an all-time high of 1.88 million dollars in July.

Property values ​​in Christchurch have fallen $24,779 (3.1%) since the market peak in June, while values ​​in Tauranga, Hamilton and Dunedin have fallen $92,000, $68,000 and $63,000 respectively $ from their market top.

Of the 645 major metropolitan suburbs with 20 or more sales in the past 12 months, only 24 are still seeing growth in value, most of which are in Queenstown-Lakes.

Figures from the OneRoof Valocity House Value Index show continued declines in 15 of the country’s 16 regions over the past three months.

Average property values ​​in New Zealand have fallen 3.7% to $1.023 million in the past three months, while annual growth was just 0.7%.

Only the West Coast, New Zealand’s cheapest housing market, saw value growth in the three months to the end of September, but the 0.5% rise to $407,000 shows that the Market collapse also puts pressure on home values.

The largest three-month declines were seen in Greater Wellington (-7.3%), Nelson (-5.7%) and Manawatu-Whanganui (-5.4%). Auckland’s average property value fell 4% over the same period – and recorded its first annual decline since July 2011, when values ​​fell just under 1%.

Property in Wellington -
Real estate in Wellington – “the most troubled housing market in the country”, according to James Wilson, Head of Valuations at Valocity. Photo/Getty Images

Property values ​​in Auckland fell 1.9% year-on-year, down $27,000. Wellington (-9.4%), Manawatu-Whanganui (-2%), Nelson (-1.3%) and Hawke’s Bay (-0.1%).

James Wilson, head of valuations at Valocity, OneRoof’s data partner, said: “Greater Wellington remains the nation’s most troubled housing market. Property values ​​fell in all eight local authorities in the region. [TLAs] in the quarter, and homes in the capital are now worth $99,000 less than a year ago.

“Cost of living pressures and strong signals from the Reserve Bank that further interest rate hikes are on the horizon have dampened buyer enthusiasm, and as long as supply continues to exceed the demand, price growth is unlikely to return any time soon. Continued falls during the quarter suggest the market has yet to bottom out.”

Wilson said some smaller centers, where prices remain relatively low, were still seeing positive growth.

“Property values ​​in Kaikoura, Opotiki, Westland, Thames-Coromandel and Hurunui all increased during the quarter. Some of these areas are popular with buyers looking for vacation homes, which bodes well for them. as we head into spring and summer,” he said. .

The number of settled sales fell from 95,455 in the 12 months to the end of August to 93,847 in the 12 months to the end of September, while new listings tracked 2019 and 2020 levels.

OneRoof editor Owen Vaughan said properties were taking longer to sell in the current climate, which had put pressure on movers.

“Owners looking to list will understandably be worried about where their property currently stands in the market and what method of sale they should choose. While auction clearance rates for 2022 are well down from Compared to the previous year, when demand was at its peak, agency feedback highlights that auctions consistently achieve better and faster results than other selling methods.”

Wayne Shum, head of research at Valocity, said the number of mortgage registrations fell from just 6,100 in July to just over 5,300 in August – the lowest level since August 2021, when the country been pushed back into a hard lockdown after the Delta strain of Covid-19 broke out.

“First-time home buyers have been hit hard by the lending landscape and their market share has fallen from over 40% before Christmas 2021 to 36.7% in March. However, falling house prices have helped the share of first-time home buyers to rise to 39.7″. percent in August this year,” he said.

“Around 55% of mortgage holders who purchased in the second half of 2020 and the first half of 2021 are expected to soon exit low interest rates over the next 12 months and move to higher rates, reducing their purchasing power.

“The Reserve Bank raised the OCR by 0.5 percentage points in August, and is expected to do so again on October 5 and in November, in an effort to lower inflation, which stands at 7.3% .

“Rent growth has stalled as interest rates continue to rise, putting more pressure on cash flow for some investors. There is also an oversupply of certain types of rental properties, which means that rents cannot be increased to cover shortfalls. Also, it is more difficult to obtain interest-only mortgages, which some investors previously relied on.”

Wilson said rising construction costs and worsening supply chain issues would also impact the market.

“Some developers will struggle to complete construction work due to labor and material shortages and rising material and borrowing costs. Sunset clauses may need to be exercised to void contracts pre-sale in these cases,” he said.

“However, the New Zealand economy is in good shape and this, coupled with low unemployment, should support the housing market.”