QV’s house price index for August has been released, with values nationally collapsing 5.5% over the quarter – an acceleration from the 4.9% decrease in quarterly values reported in July.
As illustrated in the table below, quarterly dwelling values have fallen heavily across every major area with the exception of Queenstown Lakes District:
New Zealand house prices plummet over August quarter.
QV General Manager David Nagel commented that New Zealand’s “residential market is desperate for some oxygen with a dwindling pool of buyers spoilt for choice with an oversupply of listings”. He added that “there’s no immediate sign of things getting any better with interest rates likely to rise further and business confidence starting to wane”.
Nagel also noted that market gains from August 2021 have now “been eroded from the falls in the first seven months of 2022”, and that “we’re starting to see some pretty significant value reductions now, especially in the main urban areas where value growth was previously so strong”.
Accordingly, “it looks as though it’s going to get tougher before it gets any easier for sellers. First-home buyers will continue to struggle for finance with tight credit conditions and affordability constraints. Plus there’s still plenty of new homes in the pipeline, which will add further to oversupply, putting further downward pressure on prices”.
As noted yesterday, the number of homes listed on Realestate.co.nz ballooned by 108% in August compared with a year earlier. At the same time, mortgage demand has collapsed in response to the Reserve Bank’s aggressive rate hikes:
New Zealand mortgage commitments crash.
All of this points one way for New Zealand house prices: down.
After experiencing one of the world’s biggest price booms over the pandemic, New Zealand housing is now poised for one of the largest busts.
