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Property values continue to fall

Back-to-back housing market reports spell more bad news for Wairarapa homeowners, as mortgage and interest rates continue to rise, along with the official cash rate.

The house price index published yesterday by Quotable Value [QV] showed market predictions from 12 months ago coming to fruition, with property values continuing to decline and stagnate.

In the past year, average house values in each of the region’s districts have dropped by over a hundred thousand dollars, according to the state-owned enterprise.

In Wairarapa, the average house value showed an annual decrease of about 16 per cent in Masterton and South Wairarapa and a whopping 23 per cent year-on-year drop in average house values in Carterton.

QV said Masterton and South Wairarapa recorded average house values of $572,696 and $832,555, respectively, down from averages of $687,527 and $993,161 recorded at the same time last year.

Carterton’s average house values fell from $771,334, recorded on March 1 2022, to $592,690.

Nationally, average house values have fallen by 13.3 per cent over the past 12 months, dropping from just over $1 million to $907,737.

In its latest quarterly report, QV said the residential property downturn appeared to be gaining momentum once again, “with home values making their largest first-quarter fall in more than 15 years”.

In Wairarapa, Carterton experienced the largest quarterly drop, with a fall of 4.2 per cent, larger than the -3.9 per cent average national change, while Masterton and South Wairarapa saw quarterly changes of -2.3 per cent and -1.6 per cent, respectively.

However, QV noted the low sale volumes in New Zealand’s regions over the last quarter meant statistics were continuing to fluctuate, with the region’s districts far from experiencing the largest decrease, which was claimed by Grey District [-10.01 per cent].

QV said the closest comparable start of the year was during the 2008 Global Financial Crisis.

QV national spokesperson Simon Peterson said the depression was unusual at this time of year, with the summer months traditionally busier periods for buying and selling.

“It’s a tough time right now for prospective buyers who are having to deal with significant credit constraints amidst an ongoing cost of living crisis.”

Sellers were feeling the crunch as well, he said, with fewer active buyers and “plenty of stock” meaning expectations had to shift downward “to meet the evolving market”.

Peterson said real estate agents around New Zealand were reporting fewer listings indication vendors were “trying to tough it out until the market improves”.

Current predictions saw house values were destined to fall further still, he said, following the latest increase in the official cash rate, which would maintain downward pressure on the housing market.

“The good news is house prices are trending in the right direction for first-home buyers – now if only the same thing could be said of interest rates.”

A recent CoreLogic report showed a similar trend in the region with a sharp decrease in year-on-year values, in line with national trends.

CoreLogic NZ chief property economist Kelvin Davidson said it was important to consider the falls in the context of the 43 per cent surge between March 2020 and March 2022.

“There are now signs of a peak for mortgage rates, while employment also remains healthy. But interest rates for both new borrowers and existing borrowers who are repricing remain elevated and this is requiring some careful budgeting,” he said.

Additional reporting by Sue Teodoro

Mary Argue
Mary Argue
Mary Argue is a reporter at the Wairarapa Times-Age with an interest in justice and the region’s emergency services, regularly covering Masterton District Court, Fire and Emergency and Police.

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