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Falling house prices: Wellington leads with 15.9 percent drop in November – CoreLogic

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CoreLogic says housing affordability will continue to be a concern heading into 2023. (file picture)
Photo: RNZ / Richard Tindiller

House values continued to fall last month but at a slower pace, with Wellington leading the decline.

CoreLogic’s House Price Index (HPI) showed a 0.6 percent drop in November, which was less than half the 1.3 percent drop in October.

However, the drop in values was mixed in the major centres, with Christchurch still growing at an annual rate of 4.9 percent, while Wellington fell 15.9 percent, with more significant drops in Porirua, Lower Hutt and Upper Hutt.

“Wellington continues to be at the epicentre of the downturn,” CoreLogic head of research Nick Goodall said, with affordability the main reason for the correction.

Dunedin also fared better than most of the pack with a minor 0.3 percent increase in value.

Auckland’s value drops were also moderate, but Goodall said there was a need for caution as many of November’s sales took place prior to the market being hit by the most recent round of pessimism and continuing interest rate hikes.

Housing affordability would continue to be a concern heading into 2023, he said.

“Falling house values are starting to improve many of the measures we track, but persistently increasing interest rates is impacting mortgage serviceability.

“The latest data reports an average 50 percent of income is required to service a mortgage with 80 percent loan-to-value ratio for the average dwelling value,” he said, adding mortgage interest rates were likely to rise to 8 percent from next year.

The difference between the New Zealand’s central bank tough stance and the Reserve Bank of Australia wait-and-see approach was intriguing, Goodall said.

“The RBNZ will be wary of this too but appear comfortable in the knowledge they can always reduce the OCR in the future to stimulate the economy and borrowing if required.”

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