Property prices have fallen by 5 percent nationally across 2022. (file picture) Photo: RNZ / Marika Khabazi
A property analyst is predicting "ongoing weakness" in the property market in 2023, despite what appears to be a slowing down of the market downturn over the final months of 2022.
CoreLogic's latest House Price Index (HPI) report shows property values fell by 0.2 percent in December, a smaller decline than the 0.6 percent reduction in November and 1.3 percent in October.
The CoreLogic HPI showed New Zealand's property market peaked in March, with the first monthly fall in prices recorded in April, as the official cash rate climbed higher.
"This will restrict borrowing capacity and until rates stabilise we should be prepared to see further declines in value this year." CoreLogic's Nick Goodall
CoreLogic head of research Nick Goodall said while the rate of decline slowed down in the last quarter of 2022, this did not signal a downturn given the continued inflation, and a much higher official cash rate (OCR) forecasted.
"We don't expect this to signal the bottom of the downturn by any means, particularly given the outlook for further rate increases in the first half of this year," Goodall said.
"This will restrict borrowing capacity and until rates stabilise we should be prepared to see further declines in value this year."
Property prices have fallen by 5 percent nationally across 2022, bringing the average house price from $1,007,000 from the start of the year, to $956,000.
Goodall said this remained the largest annual decline since June 2009, when prices fell by 6.4 percent as the market was still in retreat following the Global Financial Crisis.
Goodall said the Reserve Bank was forecasting inflation to remain stubborn this year, thus making a higher peak to the OCR necessary.
He said this meant a continued constraint on property demand and further value falls over a longer period.
The main centres
Across the main cities, the HPI shows a moderate scale of value change throughout December, ranging from ranging from a 0.1 percent increase in Tauranga to a -0.4 percent fall in Christchurch.
Christchurch experienced the worst performance of the main centres in December, but remained the most robust centre with the average value increased by 1 percent compared to this time last year.
Meanwhile in Wellington, average property values have fallen by 16.9 percent over the year.
Goodall said the volatility across the Wellington area showed a market going through turbulence, with more on the horizon.
In Auckland, the change in value was not evident in December, with the exception of prices in Franklin falling by 2.4 percent.
The North Shore had seen a 0.2 percent increase in value in December, but Goodall said this should be considered with caution until there was consistency in data.
Values for the North Shore were down 2.2 percent over the final quarter of the year - similar to Waitākere, Auckland City and Manukau.
Regional House Price Index results
The regional HPI show the same theme of variable change in December.
Goodall said those areas experiencing noticeable lifts in value should be treated with caution, because it may reflect the false dawn of positivity regarding the market, before the renewed warnings of economic weakness expected in 2023 alongside the increased peak of the OCR.
Palmerston North and New Plymouth recorded the greatest falls in December.
Although over the longer term, the average value in New Plymouth remained 2.7 percent higher than a year ago.
Meanwhile, values in Palmerston North have fallen 12.1 percent since the start of 2022, the worst performer among the regional house markets and the city's largest annual fall on record.
Queenstown values continue to hold up, despite some weakness seen in December, with values 6.6 percent higher than the beginning of the year, as tourism returned.