File photo. QV national spokesperson Simon Petersen says in less than a year, the average national home value has fallen from $1 million, to 'just a tick over $900,000' today. Photo: RNZ / Nate McKinnon
The downturn in the residential property market is gaining momentum, with home values recording their largest first-quarter fall in more than 15 years.
The latest QV House Price Index for March indicated national property values fell an average of 3.9 percent since the start of the year, following a 2.7 percent drop in the three months to February and a 1.7 percent drop in the three months to January.
The average home value fell 13 percent to $907,737 on the year earlier.
"In less than a year the average home value has fallen from $1 million nationally to just a tick over $900,000 today," QV national spokesperson Simon Petersen said.
The rolling three-monthly rate of fall increased last month in all but two of the country's 16 largest urban areas, with the largest quarterly home value reductions in Whangārei (-6.6 percent) and Rotorua (-5.7 percent).
Of the largest cities, Auckland (-5.2 percent), Hamilton (-5.2 percent), and Wellington (-4.8 percent) led the decline.
Christchurch (-1.2 percent) and Hastings (-2 percent) were the two exceptions - the former experiencing the smallest decline of the main centres.
People were still moving to Christchurch from more expensive places, he said.
"Typically Christchurch homes are better value for money compared to the other main centres, certainly more affordable than Auckland and Wellington."
The South Island was showing more resilience than the North, with a few pockets of value growth. "The West Coast is continuing to track pretty well, generally, a slight increase this month."
However, with so few sales taking place, the statistics were likely to fluctuate.
Market slower than usual
Petersen said the first quarter of the year was usually one of the busiest periods.
"Traditionally you don't see too many home value declines this time of year," he said.
"But it's obviously a tough time right now for prospective buyers, who are having to deal with very significant credit constraints amidst an ongoing cost of living crisis."
He said sellers were also finding it tough, with plenty of stock available but fewer active buyers than normal.
"Interestingly, real estate agents are reporting significant falls in new listings across the motu, which is an indication that most vendors are trying to tough it out until the market improves."
He said the national average home value looked destined to see further falls, given the Reserve Bank's recent 50 basis point hike to the official cash rate - raising it to 5.25 percent.
"There's still a possible recession looming large on the horizon, even more mortgage repricing to come, and no small matter of an election later in the year," Petersen said.
"I imagine what little activity is taking place now is going to slow down even more during the colder months" - QV spokesperson Simon Petersen
"Our valuers across the country are telling me that many people who have been selling their homes are taking them off the market now, frustrated that they are unable to get the price they're seeking.
"Buyers are being cautious and fair enough, there's so much uncertainty right now, and many others are waiting to see how low [prices] will go before they potentially buy anything."
Big city investors on the sidelines
Auckland valuer Hugh Robson said the Auckland market was particularly quiet.
"Flood and cyclone events have certainly contributed to this, but activity was low even before these events," he said, adding that credit constraints and higher interest rates were putting off many prospective buyers.
"Investors remain quiet ... Healthy Homes legislation and the issue of interest deductibility continues to keep them out of the market for now.
"Many will be waiting to see what takes place with the upcoming election before potentially exploring their options."