ABOVE Along with Auckland, Wellington is leading the nationwide decline in house prices.

Sales slumped, prices continued falling and a raft of unsold houses sat on the market in February, traditionally a bumper month for real estate agents.

Just 3,964 houses were sold in February, down 31.3 per cent from 5,750 in the same month last year, REINZ data show. In Auckland sales were down 41.4 per cent compared with February last year.

Westpac says sales are now close to the lows in the wake of the 2008 global financial crisis.

‘Wellington is once again affordable for house buyers’

The REINZ House Price Index fell 1.5 per cent in February, one of the larger monthly falls in the past 12-18 months.

Nationwide prices are now down almost 17 per cent from their peaks in late 2021, with Wellington and Auckland leading the decline.

Across New Zealand, median prices dropped 13.9 per cent year-on-year to $762,000.

The biggest price falls were in Northland (-3.3 per cent) and Auckland (-1.9 per cent), but also Taranaki (-2.6 per cent) and Manawatu (-2.4 per cent). The Bay of Plenty
and Hawke’s Bay actually saw relatively small price falls of around 0.7 per cent.

Median days to sell in February were at 60, up 18 days annually compared to February last year.

TALK OF STABILITY

The latest QV House Price Index (HPI) shows home values are still on average 24.5 per cent higher nationally than they were when the pandemic first began three years ago.

That’s despite a 12.6 per cent average drop in the last 12 months, and a 2.7 per cent average decline this quarter.

QV national spokesman Simon Petersen says if residential property values continue to fall at their current rate it could still take up to two years to hit their pre-pandemic level nationally. “That’s a pretty big ‘if’, with the market expected to stabilise before then.”

The latest HPI figures show the average home value has fallen across the wider region by 21 per cent since February last year to reach $854,092 at the end of February this year, a figure that is still $109,609 or 14.7 per cent higher than when the pandemic began.

Home values remain more than $100,000 higher across the Wellington region than they were three years ago.

In Christchurch and Auckland, the pre-pandemic difference in dollar terms is still upwards of $200,000.

NEW LISTINGS UP

Auckland’s property sales in February slumped to their lowest for at least a quarter of a century.

Barfoot & Thompson, the biggest residential agency in the city, sold just 410 properties, down 45 per cent on the same time last year.

The only month in the past 20 years when the agency sold less was in April 2020 when virtually all commercial activity was suppressed as a result of Covid.

However, new listings at 1,309 for February were 21.5 per cent higher than in February last year. At the month’s end the agency had 4,873 properties on its
books, the highest number in a February for 10 years.

The median price of the homes sold was $1,023,000, up 2.3 per cent on January’s median price and down 8.9 per cent on that for February 2022.

The average price at $1,101,980 was down 1.2 per cent on that for January and down 7.9 per cent compared to February last year.

A feature of February’s trading was that fewer than 6 per cent of the homes sold were for more than $2 million. At this time of the year that number has regularly been about 10 per cent.

‘A feature of February’s trading was that fewer than 6 per cent of homes sold were for more than $2 million’

AFFORDABILITY

Housing affordability in Wellington is now the best in the country’s main centres because house prices have fallen the most in the capital over the past year.

CoreLogic’s House Price Index shows in the past year prices in Wellington have fallen 20 per cent, the biggest drop in the country.

As house prices have fallen so dramatically it is making the city once again affordable for house buyers, after being out of the reach of many for a couple of years.

New dwellings consented in January dropped by 86 to reach 2,777, down 2 per cent compared to January last year, Stats NZ figures show.

It was the fourth consecutive month the number of homes consented has been below the same month a year earlier.

Although the number of dwellings consented in January was down, estimated build costs were up 2 per cent.

The downturn in January’s new consents compared to a year ago was particularly significant in several areas with Auckland, down 11.5 per cent; Waikato, down 17.8 per cent; Bay of Plenty, down 14.8 per cent; Tasman, down 7.4 per cent and Nelson, down 20 per cent.

The number of stand-alone houses consented in January was down 25.6 per cent compared to a year earlier, while the number of multi-unit homes consented was up 22 per cent over the same period.

WEATHER SETBACK

The number of listings in February on the country’s oldest real estate website fell to the lowest for 16 years.

Realestate.co.nz says the 8,143 new listings last month was the smallest number for a February since data collection began and a 29.5 per cent drop on the number of listings in the same month last year.

In Auckland new listings dropped 36.9 per cent over the year to the end of February.

In Hawke’s Bay and Gisborne, which bore the brunt of Cyclone Gabrielle, new listings were down annually by 43.5 per cent and 54.4 per cent respectively.

Northland and Coromandel were also hard hit by the weather and had falls of 31.9 per cent and 37.6 per cent in new listings.

However, the drop in new listings was a national trend, apart from Nelson and Bays, where new listings were up 7 per cent.

ANZ’s latest Property Focus report says it believes the housing shortage looks gone.

ANZ chief economist Sharon Zollner says while there are a lot of assumptions required to make a housing deficit/ surplus calculation, meaning the error band is wide (tens of thousands of houses wide), for what it’s worth things looked pretty square at the end of last year.

“We estimate a housing deficit of around 75,000 houses emerged between late 2012 and early 2020. Then, with the closed border during Covid dampening new demand and the building sector going gangbusters, it looks to have been fully eroded in less than the three years to December 2022.”

She says in other words, it looks like 2023 kicked off without an undersupply of houses for the first time in about 10 years.

However, this part of the fundamentals story may well be about to change.

Zollner says net migration, if you believe the latest data, is picking up strongly, adding to new demand at a faster pace than supply growth, meaning we could soon be back in housing deficit territory.