A record number of new property listings has pushed Trade Me’s property price index down 8.3% annually across New Zealand:
The number of homes listed on Trade Me in January was up 29% on the same time last year, whereas homebuyer demand nationwide was down 5% annually.
As shown below, the main centres of Auckland and Wellington were hardest hit, with prices down 10.7% and 10.5% respectively in the year to January:
Commenting on the result, Trade Me Property Sales Director Gavin Lloyd noted that “record-breaking supply” has fueled the price drops.
There were more properties listed for sale in January 2023 than in any other January on record.
“Nationwide supply spiked by 29% when compared with the same month last year, as we have seen consistently over the past few months”, Lloyd said.
“Demand, however, went the other way and fell by 5% nationwide last month when compared with January 2022”.
Accordingly, “we’ve now seen more than 12 consecutive months of sky-high supply combined with slow demand across the country”.
And this means “going into 2023, prices are going to continue on a downward spiral unless we see market forces change”, Lloyd warned.
The REINZ House Price Index, which takes into account changes in the mix of properties sold each month and is the preferred index used by the Reserve Bank, has posted even sharper price falls, with values nationally down 16.3% from their November 2021 peak:
House prices across Auckland have plunged 21.4% from their peak, according to the REINZ, whereas Wellington’s prices have collapsed by 26.1%.
The Reserve Bank has already increased the official cash rate by 4.0% since October 2021, and economists expect it to hike another 0.5% on Wednesday followed by further increases over coming months.
Given more than half of all New Zealand mortgages will also shift from cheap pandemic fixed rates this year, and will face large increases in repayments, further house price falls seem inevitable over 2023.
