The downturn in the housing market is beginning to bite with the national average house price dropping below $1 million for the first time since September.
The QV figures showed Christchurch had seen a relatively modest decline of 3.4 percent for the quarter. Photo: RNZ / Nate McKinnon
The national average house price fell 4.9 percent over the past three months ended July to $989,790.
"The reduction in annual growth across the country is staggering," QV operations manager Paul McCorry said in a statement.
"The almost 30 percent national growth we were reporting at the turn of the year is now down to just 4 percent and that is only half the story."
"The current market correction could well tumble into a crash" if there were a large number of mortgagee sales, he said.
However, a 3.3 percent unemployment rate was supporting wage growth, which in turn offered some market support.
"So unless there is a dramatic shift in unemployment, it seems improbable that this will happen in 2022, even with higher interest rates."
Despite the dramatic-seeming numbers, the housing market in a correction not a crash, McCorry told Morning Report.
"Unless there's a dramatic shift in employment it seems improbable in 2022 that people will be forced to sell by their banks" - QV manager of operations Paul McCorry
In addition to a strong labour market, loan-to-value (LVR) ratios also provided some market support with a 20 percent deposit requirement providing some buffer, he said.
Capital gains in Wellington, Palmerston North and Dunedin, which saw large value increases in mid- to late 2021, were seeing negative growth over the past 12 months.
Auckland region's average value is down 5.5 percent to $1.4m, with Wellington city down nearly 11 percent over the three-month period - a drop of $130,000.
Other parts of the Wellington region also saw significant decreases, with Hutt Valley and Porirua values down 7 to 9 percent over the last three months.
"While those numbers seem jaw-dropping, it's no surprise that the areas that saw the fastest gains towards the peak at the end of 2021 are now seeing the sharpest declines," McCorry said.
Exceptions included Christchurch which had seen a relatively modest decline of 3.4 percent for the quarter, while Queenstown was the only major centre to see positive growth over the last three months, although only at 0.2 percent, he said.
The Wairoa District recorded the biggest average home value increase at 10.2 percent, while in the South Island the Mackenzie District led other provincial centres with 9.3 percent growth, the QV figures showed.
"How we track nationally over the next three months will largely depend on the Reserve Bank announcement on the OCR later this month," McCorry said.
"We've seen four successive 50 basis point increases since February and little sign of an arrest in the rate of inflation - any further increases will only fan the flames of this correction further."
The RBNZ started raising its official cash rate in October, which has gone from 0.25 percent to the current 2.5 percent, with expectations it would raise another half a percentage point this month.