The Real Estate Institute of New Zealand (REINZ) has released house price results for May, with the median price nationally falling 4.0% over the month to $840,000:
The next table breaks down price changes across the various regions:
New Zealand’s median dwelling price has now fallen by $85,000 (-9.2%) since peaking at $925,000 in November 2021.
REINZ CEO Jen Baird tried to put a brave face on the result:
“Over the course of 2021, house prices soared, largely due to supply not being able to meet demand, supported by historically low interest rates and access to capital. Measures introduced by the Government — including the reintroduction of LVRs and changes to the Credit Contracts and Consumer Finance Act (CCCFA) — and the Reserve Bank OCR hikes have affected market dynamics, and we are now seeing the reverse playout. The price growth of last year is receding.
“With further increases to interest rates to counter inflation expected and global economic uncertainty and supply chain disruption caused by the conflict in Ukraine, we may see market activity settle this winter at its new, slightly slower, pace.
“Real estate professionals across the country note potential buyers are taking their time to make decisions, have more confidence to negotiate prices, and vendors are recognising the market has changed and are adjusting their expectations to meet the market,” Baird observes.
The housing correction will only worsen if the Reserve Bank follows through with its forward guidance and hikes the official cash rate from 2.0% currently to 3.9% by September 2023.
Given the majority of New Zealanders are on one to three year fixed rate mortgages, the rubber will really hit the road when it comes time for these borrowers to refinance at significantly higher rates.
