15 Nov 2022

House prices drop amid market hesitancy

12:40 pm on 15 November 2022

The median price of a property in New Zealand has dropped 7 percent in the past year, but it is starting to rise again.

Blue house pointing up and red house pointing down.

Photo: RNZ

The latest Real Estate Institute data shows the median house price was up by nearly 2 percent in the past month to $825,000.

Auckland's median price dropped 12.7 percent from October 2021, to $1.09m.

There was only one record median price and that was Marlborough which saw a 20.7 percent increase, up to $781,000.

Invercargill was up 11.5 percent to $485,000.

Nationally the housing market value, measured by the Real Estate Institute (REINZ) House Price Index dropped 10.9 percent annually and is down to 12.4 percent from its peak in November 2021.

Rising interest rates and changes to tax legislation and property regulation affected the market.

Properties are also staying on the market longer, the national median was 44 days in October, an annual decrease of 10 days.

REINZ chief executive Jen Baird said several compounding factors had created uncertainty and hesitancy in the market, where there was confidence and urgency in 2021.

"We see downward pressure on prices and the pace of the market has come down. However, over the last couple of months, sales people have observed an increase in enquiries and a noticeable increase in the number of first-home buyers back in the market."

Larger cities, particularly Auckland and Wellington had borne the brunt of the median price decreases, she said.

"Auckland year on year down 12.7 percent, Wellington down 17.2. Both of those areas have seen an up-tick from last month. Auckland up 5 percentage points, which even in seasonally adjusted terms is positive.''

Agents across the country reported first-home buyers are out and about in the market, Baird said.

"Those affordability calculations though are pretty challenging for first-home buyers at the moment and particularly when we are looking at a further OCR later this month. Buyers really are taking their time and are making sure that they really understand what the short to medium term impact of those interest rate changes will have on them.

"Interest rates have always had a pretty straight forward impact in the property market. When there is uncertainty the property market reacts."

Open home attendance was up, she said.

Nationally, listings were down 4 percent to 9289. New Zealand, excluding Auckland saw an annual increase of 3.3 percent.

Property investors were sitting on the sideline waiting to see what happens, Baird said.

"Unlike people who are trading up or moving into the right school zone or retiring, these are people who are making rational investment decisions and they are waiting for those numbers to stack up.

"We are hearing that some are looking at the market at the moment and are thinking, 'well prices have got to that point now where it does make sense for me to get back in, but we are not seeking them to any great degree'."

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