The Reserve Bank of New Zealand (RBNZ) has led the developed world’s monetary tightening, lifting the nation’s official cash rate 4.50% since October 2021:
The RBNZ has also forecast further rate hikes alongside a 23% peak-to-trough decline in house prices and a recession.
QV on Thursday released its House Price Index for February, with average values falling 2.7% over the quarter to be down 12.6% year-on-year:
Commenting on the result, QV national spokesperson Simon Petersen said: “Rising interest rates and credit constraints continue to have a tight strangle-hold on the market currently, as they have had for more than a year now”.
“Many prospective home buyers are either unable or unwilling to purchase property right now while the cost of servicing a home loan is so high. Others are waiting to see when the market will bottom out, which obviously hasn’t happened yet”.
The sharp decline in home values follows the crash in new mortgage commitments, which have fallen by more than two-thirds from their peak to the lowest level on record:
House price expectations have also cratered to their lowest level since the Global Financial Crisis in 2008:
With the RBNZ set to hike rates further in coming months, New Zealand house prices have further to fall.
