The QV house price index for July, released today, showed the housing market correction was beginning to bite with rising interest rates, credit constraints and inflationary pressures.
In the 12 months to the end of July, the average Dunedin home value declined in value by 2.6% to $659,950, following a reduction of 9.1% over the first seven months of the year, including a 5.5% drop in the most recent quarter. It was the first average annual loss QV has recorded in the city since September 2011.
In a statement, local QV registered valuer Rebecca Johnston said increasing interest rates related to the continued rise in the OCR, as well as rising inflation and building costs, were continuing to impact on demand for new and existing homes.
"These factors are causing a greater number of people to stay put in their current properties, rather than buying or selling," she said.
Land sales continued to be low, although properties in desirable locations with harbour or coastal outlooks or in close proximity to the beach continued to hold up in value. Demand for "off-the-plan" townhouses and apartments appeared to be stronger than completed builds for investors.
Queenstown continued to hold up better than most of New Zealand with the average home increasing in value by 0.2% this quarter to $1.65million — a stark contrast to the average 4.9% reduction across the country — with the average annual home value growth rate sitting at 15.1%.
QV property consultant Greg Simpson said market conditions remained highly changeable. Sales volume was reduced but there was still positive value growth for residential property.
The market for higher value property continued to perform well and the return of investors was also being seen, due to increasing rental returns for both long- and short-term investments.
In Invercargill, the residential property downturn appeared "marginally less severe" than in much of the rest of the country. The average home value had declined by 2.7% in the three months since the end of April to $482,263. Annually, local home values are 7.3% higher on average than they were at the same time last year, which was also higher than the national average at 4%.
Nationally, the average value was now sitting at $989,790. In Auckland, the average value was now at $1.4million, having fallen 5.5% over the last three-month period.
It was in the Wellington region where the downturn was hitting the hardest; the average value in Wellington city was down almost 11% over the quarter.
In the South Island, the Mackenzie district (9.3%) led all other provincial centres this quarter.
