Upper end of the market hardest hit by property price slump

More than a third of suburbs across New Zealand saw double-digit declines over the last year

Upper end of the market hardest hit by property price slump

Property values in some of New Zealand’s wealthiest suburbs have taken the biggest hits from the market downturn, according to CoreLogic’s interactive Mapping the Market tool.

In the latest update, 10 suburbs, some of which could be classed as “top-end,” saw their estimated median values falling by $300,000 or more, including Saint Marys Bay, Westmere and Orakei in Auckland, and Seatoun and Karaka Bays in Wellington.

“It’s also worth noting that houses in those suburbs are generally more expensive to start with, so the percentage fall is always going to translate into a bigger drop in dollar value,” said Kelvin Davidson (pictured above), CoreLogic NZ chief property economist. “In addition, it’s not just the upper end of the market that has seen a downturn. More than a third of suburbs across New Zealand saw double-digit declines over the last year, and Wellington made up the bulk of the suburbs that posted the biggest falls.”

Of the 31 suburbs that posted declines of 20% or more over the last 12 months, 30 are located in the wider Wellington region, while the remaining one is Fordlands in Rotorua.

“Overall, this confirms that this downturn has been pretty deep and broad-based across many parts of the country – to the detriment of existing property owners, but a sign of hope for aspiring buyers who have their finances approved,” Davidson said.

There are bright spots in the property downturn, however, with four suburbs in South Island centres posting double-digit increases.

Tuatapere in Southland saw the biggest lift in value (11.2%), followed by Reefton on the West Coast (10.6%), Waimate in South Canterbury (10.6%), and Riverton in Southland (10.3%).

Another 30 suburbs, which according to Davidson generally had affordability on their side, grew by 5% or more.

“Incomes tend to be lower in regional areas than the main centres,” he said. “But so too are house prices, and lower entry points in these markets may be supporting greater resilience in values.”

What’s ahead for the property market?

The property market continues to face significant challenges, Davidson said, including high mortgage rates for new borrowers and expensive repricing for existing borrowers.

“But many areas have already fallen significantly, and therefore could be poised to bottom out first as underlying drivers settle down,” he said. “Overall, even if sales activity and property values bottom out this year as is expected, the property market may well remain subdued into 2024. But those ‘early fallers’, or suburbs where values dropped first, could then rise sooner too.”

Explore the full CoreLogic NZ interactive market map here.

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