House prices in South Wairarapa have fallen off a cliff – if the latest industry data is to be believed.
In the most recent litmus test of the housing market, Real Estate Institute of New Zealand [REINZ] said median house prices had dropped below $600,000 – a figure almost unheard of in South Wairarapa since the pandemic.
The real estate body said median house prices were down on the previous year’s figures with a decrease of 7. 5 per cent nationwide.
It said all of New Zealand’s eight territorial authorities saw “negative movements”, but Wairarapa topped the list of the biggest decreases.
South Wairarapa’s median house price dropped a whopping 33.7 per cent on 2021 prices to $571,550, followed closely by Carterton, with an annual decrease of 26.5 per cent to a median price of $502,500.
Masterton’s prices also dropped, from $720,000 in October 2021 to $560,000 last month.
REINZ chief executive Jen Baird said there were several compounding factors creating uncertainty in the market – a marked contrast to the urgency and confidence seen this time last year.
She said rising interest rates and cost of living, tax legislation, property regulation and tightened lending criteria contributed to the slowdown.
“We see downward pressure on prices, and the pace of the market has come down.”
However, the single most influential factor appeared to be sample size, with the alarming drop in South Wairarapa’s median price only rivalled by the significant decrease in properties sold.
In October 2021, the median house price in South Wairarapa came in at $862,500 from 22 houses sold.
By contrast, last month saw only 7 houses sold in the district, a drop of nearly 70 per cent from the previous year.
Carterton was equally afflicted by a small sample size, with only six properties sold last month. However, the drop was not as large from last October,
which saw 10 properties sold.
Masterton remained at the top of the leaderboard for properties sold, with 29 last month, an annual decrease of 10.
The sample size was also a contributing factor to the increased percentage of properties selling for a loss, albeit marginal.
Core Logic’s recently published report said in Q3 [July 1 – September 30] recorded 4-5 per cent of resales in regional areas going below what was originally paid, including Carterton.
However, it said the number of deals involved was “still pretty small”, with three or fewer recorded.
The report said despite the percentage of houses selling for profit dropping from 98 per cent in Q2 to 96.8 per cent in Q3, the proportion remained high nationwide.
REINZ and Core Logic said although there had been a noticeable increase in inquiries in recent months and a growing number of houses on the market, first-home buyers were still facing barriers to entry.
Baird warned mortgage rates, already creeping up to 7 per cent, were yet to reach their peak, citing expected increases in the official cash rate and annual inflation at 7.2 per cent.
Core Logic said existing borrowers were also facing significant challenges with re-pricing of mortgages from previously low rates, to “much higher repayment” schedules.
