The average house price in April 2023 was 13.3% lower than in the same month in 2022 at NZ$902,501. The rate of market decline has slowed since the beginning of the year, and property prices remain 22% higher than they were before the pandemic, The Guardian writes.
During the pandemic, the value of homes in New Zealand was ten times the average income, up 43%, but in 2022 began a sharp decline – one of the biggest since the global financial crisis. It followed measures taken to curb property prices and inflation. It was decided to raise interest rates and in addition to the rising cost of living, this led to a large number of residents losing purchasing power.
In November 2022, according to the Real Estate Institute of New Zealand (REINZ), the national average house price fell 12.4% to NZ$810,000 (US$510,557) compared to 2021, in stark contrast to the whopping 23.8% year-on-year increase in November 2021.
Auckland, which accounts for more than 30% of New Zealand’s total real estate sales, saw the largest price decline, down 18% year-on-year. In Wellington prices in the fall of 2022 fell by 17.4%. Declines were also recorded in locations such as Hawkes Bay (-17.2%), Manawatu/Wanganui (-8.2%), Waikato (-7.4%) and Otago (-6.2%). Only the West Coast and Southern Territory saw price increases of 20% and 10.5% year-on-year respectively.
Meanwhile, housing in Auckland was the most expensive in New Zealand in November 2022, with an average price of NZ$1,065,000 (US$671,288). This was followed by Tasman NZ$869,500 ($547,948), Bay of Plenty – NZ$857,000 ($540,189) and Wellington – NZ$795,000 ($501,000). The cheapest homes could be found on the West Coast and Southland – with average prices of NZ$420,000 ($264,776) and NZ$475,000 ($299,449) respectively.
The Demographia report ranked New Zealand as a country with extremely unaffordable housing, with Auckland receiving an average of 2.6 times the average annual household income and ranked 85th most affordable out of 92 markets. The Economist study found that, on average, house prices in New Zealand are inflated by about 40% compared to income.
Prices have halved in 2022, but residential property remains significantly overvalued, at around 30% above pre-code levels and 10 times the average household income. Meanwhile, apartment rental yields in December 2022 were low, according to the Global Property Guide survey, ranging from 2.43% to 5.72%, with a city average of 3.89%. In Wellington, New Zealand’s capital, the average rental yield ranged from 3.21% to 4.41% (the average was 3.88%). In other cities it was even lower. Moreover, this market is important in the country – 32% of residential properties were rented in 2022. Average rental rates were NZ$580 (US$365).
Statista’s research department said the most expensive housing was also in Auckland in March, at more than a million NZ dollars. The most expensive city in the region was recognized as North Shore City with an average selling price of 1.13 million.
Real estate listings hit an all-time low in April 2023, and there were few buyers either. Quarterly prices in Auckland fell 4.4%, while Christchurch and Wellington recorded a 3.7% drop. In all of New Zealand, only Queenstown, a particularly attractive tourist destination, reported a 2.8% increase in property values. But even with the recorded drop in housing has not become affordable, because the decline was insufficient compared to the level of income.
Experts believe that the bottom line of the market decline is yet to be seen. The Reserve Bank’s proposal to relax restrictions on mortgage-to-value ratios, as well as the growing number of people arriving in New Zealand after the prolonged closure of the borders during the pandemic, may increase demand.