While West Coast prices drop for the first time post-COVID
House prices in the West Coast declined for the first time in the post-COVID property market in May, as price drops started to ease across New Zealand, according to Trade Me’s latest property price index.
Gavin Lloyd (pictured above), Trade Me property sales director, said New Zealand’s average asking price fell $99,500 from 2022 to $850,150 following two consecutive months of six-figure year-on-year declines.
“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,” Lloyd said. “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.”
The West Coast, which posted an average asking price of $409,700 in May, had greater immunity to property market declines due to its affordability.
“While it was a very slight drop of 0.1% 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,” Lloyd said. There are signs that the market was levelling out though, he noted.
“May’s national average asking price fell by 10.5%, easing from the 10.9% falls we saw in both March and April,” 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
In Wellington and Bay of Plenty, two of the most buoyant markets, the rate of falling property prices have slowed down.
Wellington’s average asking prices dropped $126,800 from May 2022 to $837,550. The drop is $13,000 less than the region’s $139,700 decline year-on-year in April, which according to Lloyd, suggests that “we’re at the start of a flattening market.”
A similar pattern is seen in the Bay of Plenty, where the year-on-year average asking price fell $104,050 to $881,050 – $7,000 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,” Lloyd said.
Property prices in the Auckland market are yet to ease, with the average asking price falling $161,500 from last year to just more than a million dollars at $1,065,350.
“This was our most heated market, which is correcting to more sustainable levels,” Lloyd said.
The twists and turns of supply and demand
In Gisborne and Hawke’s Bay, both supply and demand saw substantial drops from May 2022 in the wake of Cyclone Gabrielle. Gisborne’s supply tumbled by 33%, and demand by 21% from May 2022. Hawke’s Bay, meanwhile, saw supply drop by 14 % and demand by 7%.
“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,” 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.”
Elsewhere in the country, both Taranaki and Southland had a 23% increase in their supply in May, while Wellington’s dropped by that same amount.
“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,” Lloyd said.
Christchurch gains
The only properties in New Zealand to rise in average asking price year-on-year, were in Christchurch. Here, the average asking price of apartments lifted 10% to $701,300. The Garden City’s larger houses of 5-plus bedrooms, meanwhile, surged 7.5% to $1,221,900.
“Ĺtautahi is New Zealand’s city of the moment, with real energy and momentum,” 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.”
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