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Prices drop, but don’t be alarmed



For the first time in a decade, annual median house prices in New Zealand have tumbled.

For some, it will be the first time in living memory that the inexorable price rise has halted.

While one Wairarapa real estate agent drew parallels with the trend preceding 2008’s market downturn, the message overall was consistent: It’s a slowdown, not a crash, and hurdles for first-home buyers remain.

Real Estate Institute New Zealand’s [REINZ] August report showed the nation’s median house prices fell 1.8 per cent annually from $825,000 in July 2021 to $810,000 in July 2022.

Month-on-month it represented a 4.7 per cent decrease.

Carterton and Masterton both experienced drops in annual median house prices falling 5.1 per cent and 14 per cent, respectively.

However, South Wairarapa’s median house price rose by 11.9 per cent.

Chief executive Jen Baird said it was the first decrease in annual median price in New Zealand since July 2011.

She said the market had enjoyed a significant upswing in prices since the first covid-19 lockdown in 2020, and a subsequent easing was expected.

“After a strong upward movement it is slowing.

“However, prices tend to decrease more slowly than they increase and after a period of stability, the market tends to regain momentum.”

Baird said that, despite the annual drop, affordability remained an obstacle due to rising interest rates, inflation, and tighter lending criteria.

She said more affordable regions had continued to have significant growth compared with larger markets such as Auckland and Wellington, where attendees at open homes had decreased and days on the market increased.

Average “days to sell” in the Wellington region increased to 61, significantly higher than July’s 10-year average of 38 days.

Managing director of Harcourts Wairarapa Prue Hamill said the number held true for Wairarapa properties, and it was not unusual to renew an agency after 90 days on the market – a process that was almost unheard of last year.

She said the market could be unpredictable and challenging to read, citing two properties sold in Greytown last month that were listed for 19 and 97 days respectively.

“It’s an interesting market. There are signs of the things that happened when we had falls back in 2008.

“But I don’t think it’s crashing. It’s just coming back. They were extremely high prices.”

Hamill said it was still a good time to sell, and urged people to be realistic, warning against over-pricing that could lead to a price spiral.

“You’ve got to give the market a chance. When you hit the market that is the prime time to sell. If you miss that, you’re then waiting for newcomers.”

Hamill said while houses under $500,000 were nearly non-existent last year, properties were listing now at $400,000 and even $300,000.

Real Estate Brands Limited regional manager Rob Slater agreed lending conditions were still difficult but said first-home buyers were taking advantage of easing pandemic restrictions.

“During covid, the younger first-home buyers couldn’t travel, but now with the borders open up they’re heading overseas, so purchasing a home has been put on hold.

He said the result was that lower-end houses were not “snapped up in days” as they were 18 months ago.

Slater said while property was not increasing at the levels of recent times, people selling for less than they bought, was the exception rather than the rule.

He said trying to predict where the market would go was akin to crystal ball gazing, and was not anticipating a crash given what he was witnessing.

“Wairarapa has a really small monthly data set, as a result, the median can move around a lot. For example, the median sale price for South Wairarapa in May was $1.3 million, versus $750,000 in July.

“Have the values fallen by over half a million? Of course not.”

Slater said it was important to keep this in mind when looking at the data from REINZ, which was already old.

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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