New Zealand’s residential real estate market is becoming softer by the day. CoreLogic NZ data shows home prices fell across the country in May. A combination of higher rates and anti-speculation measures are rapidly cooling demand. Prices are now falling at the fastest rate since 2010 and the central bank expects them to fall a lot further.
New Zealand Real Estate Prices Made The Biggest 3-Month Drop Since 2010
New Zealand real estate prices continue to slide lower in the residential sector. Prices fell an estimated 0.8% in May, following a similar decline in April. The firm estimates over the past 3 months, prices dropped 0.9%, making it the biggest 3-month drop since 2010, during the Global Financial Crisis (GFC).
New Zealand House Price Index Change (3-Month)
The 3-month change in the CoreLogic House Price Index (HPI) for May.
Source: CoreLogic NZ; Better Dwelling.
Auckland Home Prices Are Falling 2x The National Rate
Auckland, the country’s most expensive major market, has seen price drops much larger than the national moves. Prices dropped 1.5% in May and have slid 1.8% lower compared to 3-months ago. The fall has barely rolled back gains over the past couple years, but they are falling at double the national rate.
New Zealand’s Central Bank Has Forecast Prices Will Fall Further
The Reserve Bank of New Zealand (RBNZ) expects further price declines in the coming months. Home prices are seen falling 8.1% by the end of 2022, with the market bottoming 11.8% lower than peak by March 2023. CoreLogic notes this isn’t a very big drop in contrast to recent gains, but historically these kinds of drops take years to recover.
“If this scenario were to play out, it would ‘only’ take nationwide values back to the same level as at the middle of 2021, explained Nick Goodal, CoreLogic NZ’s head of research.
Goodal does remind people that a downturn might be small, but the last recovery from a similar drop took a half decade.
“Through the last major downturn (Oct 2007-Mar 2009) values fell 9.9%, but it did take a total of five years for values to recover back to the previous peak, so expectations of a return to an upward trajectory should be tempered,” he said.