Beleaguered housing market takes a fresh leg lower

Sales of residential properties across the country have sunk to a 12 year as the number of properties on the market soar.

Wednesday, December 14th 2022, 10:46AM

by Sally Lindsay

Sales fell another 7.7% in seasonally adjusted terms, bringing them closer to the lows seen in the wake of the 2008 Global Financial Crisis. Prices fell by 2.2% for the month, the biggest monthly decline seen so far in this downturn.

The fall in prices was widespread across the country, though generally larger in the North Island than in the South. Wellington and Auckland remain the weakest regional markets, down 21% and 19% respectively from their peaks.

Westpac senior economist Satish Ranchhod says the bank is expecting a cumulative 21% drop in average house prices from their peak. “Our forecast assumes that this decline continues through 2023 and into early 2024. However, the risks are towards this price weakness playing out faster than we’ve assumed.”

The latest REINZ report shows just 5,525 properties were sold last month, dropping 36% compared to November last year. It was the lowest number of sales since 2010.

Prices are also dropping rapidly. For the first time since January 2009, 14 or more regions recorded negative price growth.

The number of sales for New Zealand, excluding Auckland, dropped by 31.7% annually, from 5,462 to 3,728, but sales activity was up 5.6% compared to October.

Sales in all regions declined compared to November last year – all dropping by a double-digit percentage. The West Coast was the only region to have a less than 20% drop - down 15%, from 40 to 34 houses sold.

The regions with the greatest annual percentage decline in sales were: Gisborne, down 45.2% annually from 62 to 34 properties sold; Auckland, down 43.5% annually from 3,182 to 1,797; Manawatu/Whanganui, down 39.1% annually from 414 to 252; Wellington, down 36.2% annually from 870 to 555.

Jen Baird, Chief Executive at REINZ chief executive Jen Baird says buyers are again weighing up the likely impact on mortgage rates with downward pressure on property prices. Those thinking of selling are again looking at the market and asking, “is this the right time”?

Listings

As sales and prices drop, the number of homes on the market was up a whopping 47.7% year-on-year.

At the end of last month, the total number of properties available for sale across New Zealand was 28,449, up from 19,260 in November last year. For New Zealand excluding Auckland, it was 17,579 — an annual increase of 64.9%, from 10,661.

Two-thirds of all regions had an annual increase in listings of at least 50%. Nelson recorded an increase of more than 100% compared to November last year and the previous month, five regions had a 100% jump.

Prices

Across New Zealand, the median price for residential property dropped 12.4% annually, from $925,000 in November last year to $810,000 in November this year. Month-on-month, this represents a 1.2% decline from $820,000 in October.

The median residential property price for New Zealand, excluding Auckland, dropped 7.1% — from $770,000 to $715,000. There was a month-on-month decline of 1.4% from $725,000 in October.

Fourteen of 16 regions’ median prices dropped; in October, there were 12.

West Coast had a record median price, up 20.0% annually from $350,000 to $420,000, while Southland reached an equal high (last reached in February 2022) — up 10.5% annually to $475,000.

Auckland had the greatest median price drop — down 18.1% compared to November last year, from a record $1,300,000 to $1,065,000. All seven Auckland districts had negative growth, with Papakura down 24.8%, and Auckland City and Waitakere City down 22.7%.

In Wellington, the median price was down 17.4% annually, from $962,500 to $795,000 last month. Six of the eight territorial authorities in the region had negative median price movements. The Masterton District (+3.5%) and the Carterton District (+1.4%) had annual increases, with Lower Hutt City (-26.6%) and Porirua City (-19.5%) seeing the biggest drops.

Baird says the market is less competitive. “While owner occupiers remain a strong presence, investors have largely stepped back — for now. Prices have come down 12.4% since their peak last November. Affordability will remain an influencing factor, but for those previously sidelined in last year’s quick-paced market now I is time to take another look at what’s out there.”

Tags: housing market