ONEROOF HOUSE PRICE REPORT: Market Shows Signs Of Bottoming Out

• OneRoof-Valocity data shows house prices up in Northland, Otago and West Coast
• Rate of decline slows in Canterbury, Taranaki and Wellington
• But shrinking sales and fall in new listings volumes point to challenging winter
• New figures show 15 percent of listed properties dropped their asking price by more than $10,000
• Nationwide average discount in the last seven months was $43,000 and $51,000 in Auckland
• Taranaki sellers are least likely to resort to price-slashing

There are signs that the downturn is bottoming out for homeowners, with the latest figures from OneRoof showing value rises in three regions and the rate of decline slowing in others.

New Zealand’s average property value fell 2.3 percent ($22,000) to $950,000 in the three months to the end of May, as successive interest rate rises put downwards pressure on sales, according to the OneRoof Valocity House Value Index.

Northland, Otago and West Coast were bright spots in what has been a tough autumn market. All three regions enjoyed lifts in their average property value, with West Coast recording the highest quarterly value growth, at 2.9 percent.

The rate of value decline has slowed or even plateaued in some regions, including Canterbury, Taranaki and Wellington, but the figures also point to worsening market conditions in others. Over the last three months, the rate of value decline accelerated in eight regions with Bay of Plenty, Hawke’s Bay (still reeling from the devastating impact of Cyclone Gabrielle), Marlborough, Nelson and Southland hardest hit.

The figures also highlighted continued uncertainty in the country’s biggest housing market. Auckland’s average property value dropped 3.2 percent ($43,000) over the quarter to $1.291 million, but the rate of decline picked up in April and May, suggesting house prices in the region have still a way to go before they hit the bottom.

Wayne Shum, Senior Research Analyst at Valocity, says nationwide sales volumes in the three months to the end of May were down nearly 38 percent year-on-year.

“The largest declines were in metro areas where affordability remains a barrier to entry. While first-home buyers have increased their share of the market from 37 percent in April 2022 to 44 percent in April this year, the actual number of first-home buyer transactions has dropped 18 percent over the same period. Largely absent from the market are investors, whose number of purchases plunged 29 percent year-on-year.”

OneRoof Editor, Owen Vaughan, says the drop in new listings volumes was having an impact on the market, with only two regions, Taranaki and Southland, recording an annual increase in May.

“Nationwide new listings in May were down 12 percent on the month before and down 21 percent year-on-year. The drop-off in new stock coming to market was steepest in Wellington, with new listings in the region down 41 percent year-on-year. In Auckland, the reluctance to list is hitting overall stock numbers. Total listings for the region are down nearly 4 percent year-on-year,” says Vaughan.

“Market conditions remain positive for buyers, though, with prices now hitting the bottom, or at least very close to the bottom, especially for entry-level properties. The lack of competition from investors and the news that rates have peaked suggest this is as about as good as it is going to get for first-home buyers,” he says.

Research from OneRoof also shows vendors are coming under increasing pressure to drop their price expectations in order to secure a sale. Analysis of listing prices by OneRoof found that the asking price has been discounted in more than one in 10 properties brought to market in the last seven months.

Of the more than 62,000 residential properties listed on OneRoof since October 2022, 15 percent have dropped their asking price by at least $10,000.

The average price drop over the period was 4.82 percent ($43,000) but sellers in some regions were offering sharper discounts. In West Coast and Manawatu-Whanganui, the average asking price was dropped by more than 7 percent, while Auckland region’s average asking price dropped by $51,144 (4.59 percent) and Wellington and Canterbury’s fell $41,994 (5.28 percent) and $33,294 (4.28 percent) respectively.

Discounting is most prevalent in Waikato, with the asking price dropped in almost 30 percent of all properties in the region that have been listed since October 2022. Bay of Plenty had the next highest share of discounting, at 29 percent, followed by Southland (23 percent) and Northland (21 percent).

The research suggests sellers are becoming more desperate, with most regions recording a spike in price drops in recent months.

Between April 1 and May 15, one in five listings nationwide was discounted, up from just 13 percent in the last quarter of 2022. In the Bay of Plenty, 42 percent of listings dropped in price, up from 25 percent in Q4 2022, and in Waikato, the share percentage of discounted listings hit 39 percent. The spikes in both regions were fuelled by widespread discounting in Tauranga (37 percent of all listings) and Hamilton (40 percent). 

Some sellers, though, were prepared to take bigger hits in order to shift their properties. The research identified 837 listings where the asking price was dropped by $100,000 or more, with the seller of one property in Ohauiti, in Western Bay of Plenty, slashing the price by $800,000 to $3.65 million.

The research also found that discounting was most prevalent in Auckland Central. Almost 200 listings in the apartment-heavy suburb have been discounted since October 2022 (half of which are still on the market), with the average drop in the asking price at 6.99 percent.

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