Wellington house price slide the biggest in 20 years

House prices have fallen more than 10% since the beginning of the year in seven centers, and Wellington‘s drop is the biggest in two decades, says Quotable Value (QV).

The Wellington region’s median price fell 17.6% this year to $894,913 in October, the real estate company’s latest home price index showed.

That was the region’s steepest drop from January to October in 20 years, and it was also the largest drop anywhere, during that 10-month period, in the last 10 years.

Previously, the region’s steepest drop from January to October was in 2008 when prices fell 8.7%.

Within the region, Lower Hutt and Upper Hutt had the largest quarterly price declines at 8.8% and 7.6% respectively, but the region’s quarterly drop was 6.8%, an improvement from 9.6% last month.

Wellington QV Senior Consultant David Cornford said further price declines were expected as interest rates continued to rise.

There was plenty of stock on the market and the level was unlikely to drop anytime soon, meaning supply would outstrip demand for some time, he said.

“Sales volumes have also been slow. Given the high level of uncertainty in the market, we are seeing a number of players sitting on the sidelines taking a wait-and-see approach to their ownership decisions.”

Lower Hutt house prices fell 8.8% for the three months through October.

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Lower Hutt house prices fell 8.8% for the three months through October.

Homeowners who were in a hurry or under pressure to sell were the most vulnerable to taking a hit in today’s market, he said.

While Wellington’s price decline was the steepest, the downward pressure on the market had a significant impact in other areas as well.

Palmerston North prices had the second biggest drop since the start of the year, falling 13.7% to an average of $663,441 in October.

In Auckland, the regional average dipped 11.7% to $1.34 million in the 10 months to the end of October. Prices fell across all boroughs over the same period, with the biggest drops in Auckland’s central suburbs (+12.4%) and the North Shore (+12.1%).

But Auckland’s rate of decline slowed to 4.4% for the three months to the end of October, from 5.8% in the three months to the end of September.

Hamilton, Napier, Hastings and Dunedin also saw price drops of more than 10% between January and October, with falls of 10.5%, 11.6%, 11.5% and 10.4%, respectively.

Nationwide, prices fell 3.9% to an average of $951,040 for the three months to the end of October. That left the average price 9.7% lower than at the beginning of the year and 5.1% lower than the same period last year.

But, as with Wellington and Auckland, the quarterly rate of decline slowed from 5.4% at the end of September.

House prices in Queenstown have bucked the trend and are up 4.9% since January.

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House prices in Queenstown have bucked the trend and are up 4.9% since January.

In Christchurch, prices were down 3.2% from the start of the year, but the October average of $758,673 was 3.9% higher than the same period last year.

Queenstown was the only area to buck the trend., with prices rising 4.9% since January. Now he was averaging $1.70 million.

QV COO David Nagel said the market’s traditional spring rally had been little more than a blip, although there was a seasonal rise in prices.

That had kept downward pressure on prices, especially as interest rates had also risen, and were expected to rise further to quell high inflation, he said.

“Although the rate of decline has slowed in recent months and may continue to decline as summer approaches, rising volumes of listings are giving buyers plenty of choice and an advantage when it comes time to trade.

“With interest rates trending higher, no one is going to willingly pay a larger mortgage than they owe. This is likely to continue to have a dampening effect on the market for quite a while yet.”

Economists expect prices to continue falling and ANZ Y CoreLogic both now posted an 18% decline from their 2021 peak. Adjusted for inflation, that was a nearly 27% drop.

That was a significant drop, but prices have risen about 45% over the course of the pandemic, and most owners would still be sitting on capital gains generated on the boom.

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