Summarised by Centrist
New Zealand house prices have fallen back to mid-2017 levels after adjusting for inflation, with the housing market still struggling to recover from its November 2021 peak.
Owners have experienced both falling nominal property values and an erosion of purchasing power.
According to Australian economist Leith van Onselen of MacroBusiness, the latest Real Estate Institute of New Zealand (REINZ) house price index shows nominal prices falling 1.5% over the past year.
Most of the decline occurred in the 18 months following the 2021 peak, with prices largely moving sideways since then. However, inflation has continued to erode their real value.
The Reserve Bank increased the official cash rate to 2.75% in September, its second consecutive rise, adding pressure to an already weak housing market.
Meanwhile, properties available for sale are at their highest level in more than a decade, according to van Onselen. REINZ figures show sales volumes down 11.6% annually, with properties taking three days longer to sell than a year earlier.
Van Onselen argues that buyer attitudes have shifted from fear of missing out (FOMO) to fear of overpaying (FOOP).
He expects further weakness in house prices as higher interest rates, increased listings and reduced buyer confidence weigh on the market.
Re-published from the Centrist with permission
