Buyers step back, annual median house price growth recedes

Ōtautahi - The month of May brought another monthly decline in house prices, thought latest Real Estate Institute NZ report shows the monthly decline was a little smaller than expected.

It’s possible the housing slowdown is happening a little slower than experts forecast. Tighter credit conditions, higher mortgage rates and increased housing supply continue to gently squeeze the  New Zealand property market.

Sales are slower to complete, property is staying on the market longer and upward pressure on prices is easing, according to the latest data and insights from the REINZ. 

Across New Zealand, median prices for residential property increased 2.4 percent annually, from $820,000 in May 2021 to $840,000 in May 2022. Month-on-month, this represents a 4.0 percent decrease from $875,000 in April.

The median residential property price for New Zealand excluding Auckland increased 7.6 percent annually from $678,500 in May 2021 to $730,000 in May 2022. There was a month-on-month decrease of 3.3 percent from $755,000.

One region showed negative annual median price growth. Auckland was down 2.2 percent compared to May last year, from $1,150,000 to $1,125,000.

The last time the annual median price dropped in Auckland was October 2019. The region also recorded a month-on-month decrease of 3.9 percent, down from $1,171,000 in April.

Hawke’s Bay’s May 2022 median price mirrored May 2021’s median showing no annual median price movement.

In May 2022, the West Coast was the only region to achieve a new record median price, reaching $395,000, up 30.8 percent from $302,000 at the same time last year. This was the first record price in the region since December 2021. 

Overall, May 2022 had the least number of record median prices in a May month since 2019.

Five territorial authorities achieved record medians. Selwyn district and Waitaki district have had the most record months in the past 12 months and Wairoa district has the least with no median price records in the past year.  

With the exception of the West Coast, median prices in the regions have come off their peak. Auckland was the only region to see an annual decrease in median price — down 2.2 percent on the same period last year.

The region has seen a significant shift in market dynamics, with the median price across the Auckland region decreasing 13.5 percent since its peak of $1,300,000 in November 2021. In the six months prior, median property prices had increased 13 percent.

A similar story can be seen in other regions. However, a few are bucking the trend. The West Coast, which saw an annual increase in median prices of 30.8 percent from May last year, has had a 12.9 percent increase in median prices since November 2021, off the back of a 15.9 percent increase over the six months prior.

Otago has seen a 4.4 percent increase since November 2021, following a 7.5 percent increase in the six months prior. 

Real estate professionals across the country note potential buyers are taking their time to make decisions, have more confidence to negotiate prices, and vendors are recognising the market has changed and are adjusting their expectations to meet the market.