The Real Estate Institute of New Zealand’s (REINZ) has released its house price results for February, which shows that hundreds of thousands of dollars of wealth has been eviscerated by the Reserve Bank of New Zealand’s (RBNZ) aggressive interest rate hikes.
The REINZ’s House Price Index (HPI) is based on sales which actually happened in the month (rather than title changes based on sales which happened potentially many months ago) and adjusts for changes in the mix of dwellings sold from one month to another.
It is also the key index used by the RBNZ.
While REINZ’s HPI rebounded 0.1% in February, they fell 2.9% over the quarter and were down 16.2% from their November 2021 peak:
Auckland’s and Wellington’s markets have been hit especially hard, down 21.6% and 22.9% respectively from their peak.
In raw median terms, values have fallen by 17.6% nationally, with $163,000 wiped off values since November 2021:
A whopping $291,000 (22.4%) of value has been wiped from Auckland values, according to REINZ.
Arguably, the bigger story is around listings, which have lifted significantly amid weak buyer demand.
At the end of February, the total number of properties for sale across New Zealand was 29,083, up 5,813 properties (+25.0%) year-on-year.
New Zealand excluding Auckland listings were also up from 13,253 to 18,656, an increase of 5,403 properties (+40.8%).
By contrast, the number of residential property sales across New Zealand fell 31.1% annually from 5,750 in February 2022 to 3,964 February 2023.
Therefore, housing supply continues to run well ahead of demand, suggesting prices will continue to fall.
The RBNZ last month forecast a peak in the cash rate of 5.50% (from 4.75%), alongside a recession and a 23% peak-to-trough fall in house prices.
Thus, there is further downside to come.
