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May Property Price Index
New Zealand property price drops ease as West Coast joins the decline22 June 2023
Trade Me’s Property Price Index for May saw year-on-year house prices in the West Coast dip for the first time in the post-Covid property market, as price drops start to soften across Aotearoa.
New Zealand’s average asking price fell $99,500 from 2022 to $850,150 after two consecutive months of six-figure year-on-year drops, Trade Me Property Sales Director Gavin Lloyd said.
“For the last seven months, the national average asking price has fallen, including year-on-year decreases in 14 of the 15 regions we monitor. However, the West Coast, New Zealand’s cheapest region, was an outlier, with asking prices continuing to increase despite drops everywhere else. That changed in May when the region’s average asking prices also dropped,” Mr Lloyd said.
The affordability of the West Coast, which had an average asking price of $409,700 in May, gave it greater immunity to the property market drops, Mr Lloyd said.
“While it was a very slight drop of 0.1 per cent from 2022 it was still a u-turn, signalling the ongoing effects the increased interest rates and cost of living are having on house sales,” Mr Lloyd said.
However, Mr Lloyd said there were signs the market was levelling out. “May’s national average asking price fell by 10.5 per cent, easing from the 10.9 per cent falls we saw in both March and April,” Mr Lloyd said.
“Declines in property values are slowing and as we approach the end of interest rate rises, this gives promise that buyers and sellers will both have more certainty as we head out of the winter months.”
Regional prices tempering
The rate of falling property prices in two of the most buoyant markets - Wellington and Bay of Plenty - has slowed down, Mr Lloyd said.
Wellington’s average asking prices slid down $126,800 from May 2022 to $837,550. “While on the face of it the drop is high, the region’s year-on-year prices fell by $139,700 in April which is $13,000 more than May, suggesting we’re at the start of a flattening market,” Mr Lloyd said.
A similar pattern in the Bay of Plenty, with its year-on-year average asking price dropping $104,050 to $881,050 - $7000 less than April’s fall.
“While we are still seeing a reversal of the pandemic price gains, it appears that in some regions we may be close to the bottom of the market.”
The Auckland market was yet to see prices ease with the average asking price falling $161,500 from 2022 to just over a million dollars at $1,065,350.
“This was our most heated market, which is correcting to more sustainable levels,” Mr Lloyd said.
The twists and turns of supply and demand
Gisborne and Hawke’s Bay both saw substantial drops in both supply and demand from May 2022, following the impacts of Cyclone Gabrielle. Gisborne’s supply dropped by 33 per cent, and demand 21 per cent from May 2022. While Hawke’s Bay’s supply dropped by 14 per cent and demand by 7 per cent.
“As a small market, the shifts in the Gisborne property market appear a lot more dramatic, but both regions are feeling the pain of Gabrielle,” Mr Lloyd said.
“As they recover from the devastation we expect there to be less interest in the property markets there, with people waiting for decisions to be made,” Mr Lloyd said.
Elsewhere in the country, both Taranaki and Southland increased their supply by 23 per cent in May 2023, while Wellington’s supply dropped by that same amount of 23 per cent.
“Wellington vendors appear to be holding tight to see what happens in the market and if factors such as the Reserve Bank’s move to increase the capacity of low deposit lending improves conditions for selling,” Mr Lloyd said.
The only properties in Aotearoa to increase in average asking price year-on-year, were in Ōtautahi. Christchurch apartments rose 10 per cent to $701,300, while the Garden City’s larger houses of 5+ bedrooms spiked 7.5 per cent to $1,221,900.
“Ōtautahi is New Zealand’s city of the moment, with real energy and momentum,” Mr Lloyd said.
“The legacy of the earthquake rebuild is an ongoing story. A lot of the apartments in Christchurch have been rebuilt to a high quality, which is part of the reason they are getting healthy prices,” Mr Lloyd said.