New Zealand’s housing market crash gathers pace

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:

New Zealand house prices

The next table breaks down price changes across the various regions:

New Zealand house prices by region

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.

Unconventional Economist


  1. Hugh PavletichMEMBER

    Leith and Macrobusiness Australia ‘features’ today on Stuff New Zealand ! …

    New Zealand: The Ardern government is losing support because of its failure to deliver on promises …

    It’s the interest rates, stupid – house prices and interest rates create political pain … Dileepa Fonseka OPINION … Stuff New Zealand …–house-prices-and-interest-rates-create-political-pain

    Pavletich (Paulson) comment on thread …

    People are encouraged to go directly to the Macrobusiness Australia website to read Leith van Onsolen’s flood of writings on the failings of the Ardern government.

    He has been highly critical for a very long time.

    To illustrate … check out his article of 9 June illustrating the latest Roy Morgan poll ‘Voters raise pitchforks against Jacinda Ardern’ which concludes with …

    ‘The broader issue facing Ardern is that she is no longer trusted after breaking multiple election pledges around housing and immigration.’

    The latest Ipsos NZ Issues Monitor is very clear that cost of living and house price inflation are by far and away the major concern of New Zealander’s.
    Borders open: More people leaving New Zealand than entering …Brianna McIlraith … Stuff NZ

    More people are leaving the country than entering, with departures the highest since February 2020, data from Stats NZ shows.

    In total, 97,093 New Zealanders departed overseas in April.

    Tourists arrived, but in smaller numbers. There were 54,303 tourists in April, equal to about 18% of tourist arrivals in pre-pandemic April 2019. … read more via hyperlink above …
    17th Ipsos NZ Issues Monitor – June 2022

    Why National is winning … Toby Manhire … The Spinoff

  2. kiwikarynMEMBER

    It can drop all the way back to January 2020 and the vast majority of people won’t care. Only a small number of people bought houses in the last 2.5 years, most of whom sold one house to buy another so no net difference. Interest rates are simply going back to what they were prior to Covid. Its only if they go a lot higher than 2019 rates that people will start to squeal. In the meantime, any distressed housing that hits the market will be soaked up by the ten years worth of new Permanent Residents that Jacinda has created this year. Just need to get the CCCFA stuff sorted, then the Chinese and Indians can hoover up all the houses like its 2015 again.

  3. Hugh PavletichMEMBER

    UPDATE …New Zealand: The Ardern government is losing support because of its failure to deliver on promises …

    … Hope on the building supplies front … but sadly … the ports and shipping performances are hopeless … why ? …

    … According to the recently released World Bank / S&P Global 370 ports performance report, at a national level, New Zealand’s ports are the worst performers in the world, while China and the Middle East are the best …

    Why does it take 13 weeks longer to ship to New Zealand than Australia? … Daniel Smith … Stuff New Zealand

    The (370) Container Port Performance Index – 2021 … World Bank / S&P Global … pdf

    … with thankfully … long awaited hope on the building supplies front … plasterboard about $NZ 25 a sheet ex factory in New Zealand … about $NZ 8 a sheet ex factory in Thailand …

    … How do other building products compare ? …

    ‘Unsustainable’: Shareholders ask Fletcher to explain Gib crisis … Daniel Smith … Stuff NZ

    Simplicity blasts Fletcher Building for lack of Gib … Daniel Smith … Stuff NZ

  4. “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.
    Why is MB against interest ratw rises when above clearly states low interest rates and easy credit the cause for prices rising?
    40% up in 2 years and nothing much said…. drops a few percent and the screams are deafening….

    • Demand is elastic. Was the demand for the need for shelter or was the demand created due to easy credit. Ie, the demand for a Porsche is say 20units based on you have to pay cash/in full, then the dealer says interest free, no down payment, just drive away, what is the demand for the same product, 100 units?
      So, the definition of demand has many variables.

      • Pot on Ben. Immigration was flat to negative during COVID. Low interest rates were the demand driver. Almost nothing else. Certainly job security wasnt improving at the time.

      • Spot on Ben. Immigration was flat to negative during COVID. Low interest rates were the demand driver. Almost nothing else. Certainly job security wasnt improving at the time.

  5. I live in NZ now and it is interesting watching the housing market.

    Living in a relatively good area, quality homes are still selling quite well and quickly.
    Rubbish is lingering on the market. Townhouses are stagnant

    I think these REINZ indicators are lagging and the truth on the street is much worse.
    Personally, my own home is down circa $400k so far. I think it has a little more to go.

    I have my fingers crossed for further falls – I’m hoping for a half price holiday home!

  6. Hugh PavletichMEMBER

    FURTHER UPDATE … UPDATE …New Zealand: The Ardern government is losing support because of its failure to deliver on promises …

    With Bloomberg reporting today ( behind paywall ) ‘China’s Surprise Economic Rebound in May Propelled by Coal’ that in China trucking is down 20% and new property construction starts down a staggering 42% year on year … what other building products … beside just plaster board … is the New Zealand construction industry sourcing at imternationally competitive prices from Asia / China ?

    The Economist had earlier reported it estimated China issued about 15 million residential consents / approvals in 2020 … and with its population about 1.4 billion this suggests a consent / approval rate per 1000 population per annum of 10.7 … higher than New Zealand’s and substantially higher than Australia’s.

    The better quality Thai plasterboard is about a third New Zealand’s ex – factory price … about $NZ 8 per sheet in comparison to about $NZ 25 …

    Gib crisis: 75+ businesses seek alternative plasterboard products from Thai importers … Anne Gibson Property Editor … New Zealand Herald
    … behind paywall …

    More than 75 building and construction businesses have contacted an Auckland developer who’s importing four containerloads of plasterboard a month to find out how they could get some too. …

    … “We need to help as many companies as we can get through this. We are providing details of how to import plasterboard and assisting with direction on what information territorial authorities will need to approve this,” he said. …

    … “My guess is that they would collectively be responsible for delivering 20 to 30 per cent of our new homes each year,” Brealey said of those who had inquired with him. …

    … Auckland Council was already prepared, knowing a wave of minor variations to swap out Gib board was inevitable, he said. …

    … “We submitted our minor variation request at 6.17pm on a Friday and it was approved by 2.46pm on Tuesday – less than two days. We only use the standard and moisture-resistant board, not boards for bracing or fire rating due to our solid commercial grade of construction,” Brealey said. … read more via hyperlink above …

    The truth about post-Covid life in Australia according to the Kiwis who live there … Lorna Thornber … Stuff NZ

    The cost of living is soaring on both sides of the Tasman, but some Kiwis in Australia say they’re much better off than they were back home. … read more via hyperlink above …

    Economic slowdown fears mount ahead of new GDP data … Bridie Witton … Stuff NZ

    Weak GDP figure won’t make Reserve Bank ease up on rate rises, economists say … Tom Pullar – Strecker … Stuff NZ

  7. Hugh PavletichMEMBER

    China …

    China Home Prices Drop for Ninth Month as Demand Stays Weak … Bloomberg

    Bloomberg News
    June 16, 2022, 1:37 PM GMT 12
    Updated onJune 16, 2022, 2:17 PM GMT 12

    China’s home prices fell for a ninth month in May, signaling demand remains weak despite increased government support for the slumping property market.

    New home prices in 70 cities, excluding state-subsidized housing, dropped 0.17% last month from April, when they slid 0.3%, National Bureau of Statistics figures showed Thursday.

    The figures suggest that China’s real estate sector is far from a rebound amid a worsening job crisis and weak economic recovery. Chinese households have turned to hoarding cash this year, a sign that people are bracing for tougher times even as some cities emerge from crippling Covid lockdowns.

    Still Down … read more via hyperlink above …

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