House prices show no sign of rising: How is the New Zealand property market doing this week?

analyze Households with mortgages won’t hear about a rate cut for at least six months as the sluggish housing market refuses to pick up. Here’s what’s happening in the housing market this week.

Households are expected to face at least another six months of (https://www.rnz.co.nz/news/business/519323/households-struggling-to-save-or-cope-with-unexpected-bills-report) being squeezed by high interest rates and poor economic conditions.

A Kiwibank survey showed almost a third of respondents would not be able to pay an unexpected bill of $500 without borrowing, selling something or using a credit card. People are also struggling to save and budget.

Kiwibank chief executive Steve Jurkovich said he did not think the pressure and financial constraints on households would be alleviated.

“I don’t see us getting to the end yet, I feel like we’re closer to the end than the beginning.

“We won’t see any meaningful rate cuts until at least late 2024, and possibly into 2025.

“When you look at inflation … and some pretty stubborn costs, we’re going to be facing pretty tough times and headwinds for at least the next six months.”

House prices are falling

CoreLogic chief real estate economist Kelvin Davidson said high interest rates and a weak labor market are causing Brakes on the market.

Home values ​​continued to fall, with the pace of decline accelerating in some major centres.

The latest QV House Price Index shows that national house prices fell by an average of 0.2 per cent in the three months to the end of May.

The average home value was $923,713, up 3.9% from the same period last year.

Auckland leads the decline It was the fourth consecutive month of quarterly price declines of 1.4%.

QV operations manager James Wilson said the market would remain under pressure as long as interest rates remained high.

“The housing market has largely ground to a halt and now that the seasonal slowdown has well and truly set in, both buyers and sellers continue to grapple with tough economic conditions,” Wilson said.

“So those who can afford to buy now have the upper hand. Buyers have so much choice and time, it seems, with nothing to suggest prices will rise again any time soon.”

Similarly, CoreLogic’s quarterly analysis of suburb prices showed that 221 of the 938 suburbs analysed had seen values ​​fall by at least 1 per cent over the June quarter, with 10 seeing values ​​fall by 5 per cent or more.

House prices are falling in many places, especially in wealthy and affordable areas.

Mr Davidson said the tax cuts and changes to lending rules – easing LVRs and introducing DTI limits – were unlikely to change the “sluggish” housing market this year.

Suburbs such as Auckland, Hamilton, Tauranga and Wellington saw the biggest falls, while Christchurch and Dunedin saw less pronounced falls.

With the tax cuts taking effect July 1, homeowners across the country are preparing for some The largest rate hike to date.

Topping the list are the West Coast Regional Council, which is proposing a 27 per cent pay rise, and Hastings District Council, which is proposing a 25 per cent rise. Wellingtonians are proposing a 17 per cent rise, and Hamiltonians are proposing a 16.5 per cent rise.

Auckland households will see a small increase in home prices of about 6.8 per cent. These figures are likely to change as the city council finalises its long-term plan.

Loss of rights

New housing data shows thousands of First-time homebuyers are losing equity -The value of their property is less than what they paid for it.

CoreLogic data shows that more than 8,500 first homes purchased between October 2021 and March 2022 have fallen in value

More than 2,000 homes saw their prices drop by more than 20%, meaning any equity the homeowners had in the deal could be wiped out.

Of the homes worth less than their purchase price, 42 per cent were in Auckland and 10.8 per cent were in Wellington.

However, CoreLogic head of research Nick Goodall said unless a buyer’s circumstances changed, it shouldn’t be a problem for a buyer to lose money on a home.

He said most people buy homes to hold them for the long term.

Goodall said that although house prices have recovered from the bottom, the growth momentum in the real estate market in the second half of 2023 has gradually disappeared.

Construction cost inflation

The changes make construction simpler and cheaper, and products easier to import, but are unlikely to have much of an impact on construction costs in the short term.

this Average construction cost Annual price growth for a standard three-bedroom house in the major centres was 1.8 per cent, returning to pre-COVID levels, according to the latest QV CostBuilder report. This remains the lowest level in more than four years.

The annual rate was 4.9% as of the end of December last year and will reach a high of nearly 21% in 2022.

Data showed a fall in prices for some materials and a slowing housing market forced builders to cut profits.

QV CostBuilder spokesman Simon Petersen said new home builders might have to wait a while longer.

“In the long term, we doubt this will have a significant impact on construction costs.

“It takes time to implement these changes, and the government is not moving fast. This certainly requires optimism.”