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A valuer says the market has not seen the worst of it yet.
QV released its quarterly Quartile Index yesterday which found values in the lower quartile of the city’s housing market dropped by 8.1% to $440,708.
Values in Dunedin’s upper quartile dropped by 2.2% in the past three months to $1.05 million.
Overall, the city’s average value dropped by 3.4% to $698,673.
The drop at the lower end of Dunedin’s market was the second-biggest drop in the country, behind a 10% drop in Auckland suburb Papakura’s lower quartile market.
Nationally, the country’s mean average home value dropped by 1%.
QV general manager David Nagel said it was the first time since the end of the Alert Level 4 lockdown in 2020 that the upper quartile of the country’s market had recorded no value growth and the first time the lower quartile had a loss in more than two years.
Rising interest rates, affordability constraints and a tightening of lending criteria was now beginning to impact on home values much further up the ladder.
“This high level of volatility in the market right now is a sign of these highly volatile times that we live in, with rising costs, rising interest rates, rising inflation, and rising tensions in the Ukraine.
"In my 30-plus years as a registered valuer, I’ve never seen anything quite like it before - and I’m not sure we’ve seen the worst of it either," he said.
Dunedin’s Bayleys Metro sales manager Adam Gain said it was clear the market was slowing.
It was now more of a lengthy process for potential buyers to work with banks to secure finance and that was one of the challenges impacting the market.
There were quite a few houses on the market at the moment for under $600,000, he said.
The average days on the market in April was about 38 days. That compared to 27 days in April last year, Mr Gain said.
There were 118 sales in Dunedin last month, down from 139 in April last year, he said.
Dunedin’s market had always been "really solid’’ and had not had the "peaks and troughs’’ of other markets, such as Auckland.
With the hospital build attracting more people to the city, the strong rental market and general population growth, Dunedin was well placed to get through an over-supplied market, Mr Gain said.