July was undoubtedly a shocker for New Zealand’s housing market, with a broad spectrum of data showing tumbling prices, swelling stock, and/or plummeting sales.
First, CoreLogic reported the steepest decline in house prices since the Global Financial Crisis, with values down 2.5% over the three months to July and all six major regions falling.
Second, QV’s House Price Index reported that average dwelling values had plunged 4.9% over the three months to July, with all but one major district falling in value.
Third, and most importantly, the REINZ House Price Index, which is considered one of the most comprehensive measures of house prices and is monitored most closely by the Reserve Bank, posted a 1.4% decline over the month, a 4.9% fall over the quarter, and a 2.9% decrease year-on-year. Values declined across 25 out of 26 urban districts, with sales volumes also plummeting 37% over the year to July.
Fourth, Tony Alexander’s latest survey of real estate agents showed that a record net 4.5% of people are planning to pull back on plans for buying a house to live in:
A record net 12.5% plan spending less on an investment property:
And a net 66% of agents said house prices are falling in their areas of operations.
The final piece of housing data for July has been released, with the TradeMe Property Index reporting that price fell another 2.0% over the month of July on the back of a record high 54% year-on-year increase in the number of properties for sale:
“The market has well and truly flipped and we’ve now seen property supply increase year-on-year for eight months straight.
“July marked the second month in a row where nationwide listing numbers jumped by more than 50 per cent year-on-year and every region saw an increase in the number of properties for sale when compared with the same month last year”…
“The national average asking price was $910,450 in July, down 2 per cent when compared with June.
“After peaking at $971,450 in March, July marked the third month in a row where we saw prices fall from the month prior.”
“We’re seeing a significantly higher number of properties for sale during what are typically quiet winter months than we have seen over the past couple of summers, when we would usually expect to see the market at its peak…
“If supply increases even further while demand remains low, we may well see prices continue to cool off.
The Reserve Bank of New Zealand (RBNZ) last week lifted its interest rate guidance in response to stubbornly high inflation. It now expects the official cash rate to peak above 4% in mid-2023, with rate cuts not likely until late 2024.
The RBNZ also projected a bigger 15% peak-to-trough decline in house prices:
If the RBNZ follows through with its guidance, it will obviously place further strong downward pressure on New Zealand house prices, which are already in freefall.
