Our take on the latest Real estate statistics (Wed 12 Oct 2022)
House prices down a further 1.2% (sa) in September
More regions record annual price declines
Monthly sales volumes down 44% from 2020's peak
The key numbers...
- House prices fell a further 1.2% in September, taking house prices to nearly 12% below the recent peak in November 2021 (both figures seasonally adjusted). Even so, house prices remain 28% higher than the start of 2020.
- Twelve of the 16 regions across New Zealand are now in annual decline, with Waikato, Gisborne, and most of the South Island joining the pack in the last month or so. Nationwide, house prices are down 8.1%pa over the last year.
- Sales volumes fell again in September, down 2.3%, wiping out the small rally experienced in August. Seasonally adjusted house sales are down to a new 11-year low (excluding lockdown periods). However, looking at the trend across the last five months, sales appear to be stabilising at about 5,200 per month.
- The national sales total is down 44% from its most recent peak in December 2020, with regional falls ranging from a 35% decline in Gisborne to a 61% drop on the West Coast.
- Days to sell remain elevated, with it now taking 47 days to sell a house, up 10 days from a year ago (which itself was higher than usual due to the nationwide COVID-19 lockdown and persistent restrictions across the upper North Island).
Sales seems to be stabilising at low levels
Seasonally adjusted monthly house sales (REINZ)
...and our reaction
- House prices continue to decline at a steady pace, with consistent monthly price falls of 1.2-1.4% over the last few months.
- Expectations that interest rates will need to rise even higher will maintain current downward pressure on the housing market, with the Reserve Bank’s latest views on inflation stronger than previously anticipated. We predict the official cash rate will rise to 4.5% before the Bank thinks it has done enough to tame inflation.
- We expect house price falls to continue into 2023, and with the current decline from peak already greater than early expectations, there’s now a question of when the steady rate of decline might slow.
- Sales look like they have stabilised, at least for now, at the low levels last seen in the aftermath of the Global Financial Crisis. The stock of properties available to sell also appears to have stabilised at around double the low point in mid-2021. The buying and selling pools are shallower at present, as borrowing limits and a realisation that achievable prices aren’t as good any more limit both parties.
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