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Economy leaves thumbprint on market

Economy leaves thumbprint on market

There’s no denying the current economy is influencing activity, but Sally Lindsay discovers there are clear signs we are in the lower phase of the cycle.

By: Sally Lindsay

1 May 2023

The latest REINZ data show the median house price across the country dropped 12.9 per cent annually to $775,000 in March. At the end of March, the total number of properties for sale was 29,284, up 3,625 properties (+14.1 per cent) year-on-year. The total number of properties sold was 5,877, up from 4,113 in February (+42.9 per cent), and down 15 per cent year-on-year.

The House Price Index showed an annual decline of 13.1 per cent. REINZ chief executive Jen Baird says there is no denying the current economy is influencing market activity, but there are clear signs the market is in the lower phase of the cycle. “With nearly 6,000 properties sold, vendors who are motivated to sell are meeting the market with more realistic expectations on time frame and price. Those who need to sell are still selling.”

‘Vendors who are motivated to sell are meeting the market’ JEN BAIRD


Home values have made the biggest first-quarter fall in more than 15 years, the latest QV data show.

Since the beginning of last year average house values have dropped more than $250,000 in Auckland and Wellington.

In many areas across the North Island value declines are in six figures, signalling more to come.

The latest QV House Price Index for March shows property values have dropped by an average of 3.9 per cent since the start of the year, weakening further from the 2.7 per cent three-monthly decline in February, and the 1.7 per cent three-monthly decrease in January.

The average home value is now $907,737, which is 13.3 per cent less than the same time last year.

It is a significantly bigger first quarter decline than at the same time last year, when residential property values dropped by an average of 0.6 per cent throughout the first three months of 2022.

The latest QV figures show the rolling three-monthly rate of reduction increased last month in all bar two of the country’s 16 largest urban areas, with the most significant quarterly home value reductions occurring on average in Whangarei, down -6.6 per cent and Rotorua, down -5.7 per cent. Of the largest cities, Auckland -5.2 per cent, Hamilton -5.2 per cent, and Wellington -4.8 per cent led the decline.

Christchurch -1.2 per cent and Hastings -2 per cent were the two exceptions, the former experiencing the smallest drop of the main centres.

‘Fixing mortgage rates at one year is the preferred option for those with debt’


Interest rate hikes and tighter lending rules have triggered the biggest property sales collapse since 1981.

Figures from CoreLogic NZ show 60,859 properties were sold in the year to February 2023, the lowest 12-month total since October 1983.

For the month of February alone, about 4,100 deals were done. That is the lowest for that month of the year since at least 1981.

The data is part of CoreLogic’s new Housing Chart Pack, which brings together housing market metrics every month.

CoreLogic NZ chief property economist, Kelvin Davidson, says the figures are striking and show just how quiet the market really is. “Few vendors are in a hurry to sell, given that unemployment remains low.”

Other key highlights of the report include house sales in the 12 months to February 2023 are down a third (-32.7 per cent) on last year; 16 per cent more listings on the market than this time last year; property values were down 1 per cent in February, -1.5 per cent in the past three months, and -8.9 per cent over the year; Wellington is the weakest of the main centres, with values down 19.7 per cent from the peak, while Christchurch is only 4.7 per cent down since; cash multiple property owners (including investors) make up 15 per cent of purchases, a record share for this type of buyer.


Economist Tony Alexander and property management company Crockers’ latest investor survey shows fixing mortgage rates at one year is the preferred option for those with debt.

Survey results show banks are seen as more willing to advance funds over the past two month; a relatively high 82 per cent of investors intend raising their rents over the coming 12 months, up from just 70 per cent in December; investors have become more concerned recently about rising insurance costs; concerns about reduced net migration are easing; and landlords report good tenants are increasingly easy to find.

Alexander and Crockers’ survey shows that for the 21 per cent of investors thinking about buying a property in the coming year, 56 per cent will still buy an existing property, 28 per cent will buy a new property, and 16 per cent will undertake their own property development.

A major slowdown in the construction industry is fast approaching. Building consents have plunged 29 per cent in the year to February, Stats NZ figures show. There were 2,972 new homes consented in February, the fifth month in a row the number of new homes consented has been below the same month of the previous year.

“The drop in the number of homes consented last month is big when compared with February last year, which had the highest number of homes consented for any February month on record,” says Michael Heslop, Stats NZ construction and property statistics manager.

On a yearly basis the number of new consents reached 48,257, down 3.3 per cent compared to the previous 12 months. It is the first time on an annual basis they have dropped since 2012.

In seasonally adjusted terms, the number of new homes consented in February fell 9 per cent compared with January.

There were 27,872 multi-unit homes (townhouses, apartments, retirement village units and flats) consented in the year ended last month, up 15 per cent compared with the previous year.

The number of stand-alone houses fell 20 per cent to 20,385 over the same period.


Rents in some areas across the country appear to be dropping, latest bond data shows.

This is bad news, particularly for the Auckland CBD market which is awash with apartment investors who are just starting to get on their feet again after international students fled when the pandemic hit. Those students have started trickling back into the market.

Many are from China after the Chinese Government told its students several weeks ago they could not get overseas qualifications online this year and had to study in the country where qualifications were offered.

Bond data from Tenancy Services shows median rent for a one-bedroom Auckland CBD apartment dropped $30 a week from $430 in January to $400 in February. For a two-bedroom apartment, the median rent also dropped $30 a week from $560 to $530.

The latest data shows the national median rent in February was $560 a week, down from $575 a week in January, but up $10 a week from February last year.

Most of the rent increases happened in the first half of last year and stabilised in the second half, but at the beginning of this year they started dropping in
some places.

Rents in Northland, Auckland, Wellington region and Tasman have not altered in a year. At the other end, Gisborne and Taranaki had increases of more than 11 per cent.