House hunters 'in hibernation' until conditions improve, QV data shows

Tuesday, 9 July 2024

Those looking for a house have slowed down on the hunting until conditions improve, QV data shows.

The average home value is now sitting at $916,285, according to QV.

Auckland had the biggest house value reduction with a 2.6% average home value decline.

Invercargill had the cheapest home value at $485,551.

House hunters have gone into hibernation, the latest Quotable Value House Price Index shows.

Here’s a breakdown of the numbers for the June 2024 quarter.

$916,285

The average home value is now sitting at $916,285.

The QV House Price Index showed home values decreased by an average of 0.9% nationally over the three months to the end of June 2024 – a slightly larger rate of reduction than the 0.2% quarterly decline for May.

The housing market recovery has stalled

But the $916,285 figure is still 2.8% higher than last year and 13.9% ($147,480) lower than the market’s peak in late 2021.

2.6%

Auckland lead the house value reductions with a 2.6% average home value decline this quarter – down from a 1.4% decrease in QV’s previous index, and marking five straight months of negative growth.

The average home value across Tāmaki Makaurau was now $1,250,372 this quarter. It followed five consecutive month-to-month reductions: 0.4% in February, 0.2% in March, 0.1% in April, 1.1% in May, and now 1.4% in June.

Meanwhile, Tauranga (-1.3%), Palmerston North (-1.3%), and Wellington (-1.2%) experienced the next largest home value reductions on average this quarter.

$485,551

Invercargill had the cheapest home value at $485,551. This was an increase of just 1% this quarter – but that was enough to outperform almost every other main centre in this month’s QV House Price Index.

But the figure was 7.1% higher than the same time last year.

Local QV registered valuer Andrew Ronald said the market conditions were flat across all price brackets.

“There is still steady demand from first-home buyers, and investors are beginning to return to the market with the restoration of interest tax deductibility rules. However, continued high interest rates appear to be limiting price growth.”

7%

QV operations manager James Wilson said with interest rates currently sitting around 7% house hunters were in hibernation.

“Tough economic conditions are continuing to make it extremely difficult for potential purchasers to save a sizeable deposit for a home, secure finance from the bank, and service a mortgage with interest rates currently sitting around 7% and on shore inflation still biting.

“Many house hunters are in hibernation now until conditions improve, potentially on the other side of winter, maybe longer.”

Two

There were still two months left of winter and Wilson expected home values to soften further throughout these winter months ahead.

“There’s currently nothing to suggest that house prices will take off again in the near future, while there’s everything to suggest that they will remain flat to gently falling. The recent shortening of the bright-line test will likely result in more listings coming onto the market, offering buyers even more choice and therefore keeping downward pressure on prices,” he said.

“The recent introduction of debt-to-income restrictions and the loosening of loan-to-value ratios are not expected to have any material effect on the market in the short to medium term, particularly while interest rates remain at their current high level.”