“With mortgage rates tipped to remain high for a while yet, it’s no surprise the market has lost a bit of the momentum we had been seeing through the early part of this year,” Davidson said.
Even the coalition Government’s planned tax relief and housing market regulatory changes were “unlikely to change that”, he said.
Davidson said home owners had so far coped well with paying higher bank fees from rising interest because the job market had remained strong.
However, recent and forecast job losses were likely to put more pressure on the economy and help stop any short-term rally in house prices.
“Looking ahead, a little less job security could see housing activity and prices remain fairly subdued,” Davidson said.
Auckland has been the main region with the biggest price falls, with Waitakere being the only district in the city where prices didn’t fall, instead remaining flat at 0 per cent growth.
Manukau had the biggest falls with a 1.4 per cent drop in May to an average $1.15m, followed by a 1.2 per cent decline in the North Shore as its average value hit $1.46m.
The fall in the three months to May had been even bigger in some regions of the city, Davidson said.
“There’s always been a perception that Auckland leads the rest of the country in terms of property market performance,” he said.
And while the market didn’t always follow this pattern, it was “pretty striking” that the city is again one of the first to see a drop in prices, he said.
“With listings up, buyers now have the bargaining power, and it’ll be interesting to see if this pattern spills over more significantly into other markets in the next few months.”
Fellow property analysts OneRoof and Valocity also found that while house prices are up on the same time last year, they have fallen over the past three months in Auckland, Gisborne and the Bay of Plenty.
Auckland’s house prices have fallen 1.1 per cent over the past three months, according to the latest OneRoof-Valocity House Value Index.
OneRoof pointed to a number of challenges in the market.
“The Government has scrapped the first home grant scheme and the much-talked-about debt-to-income (DTI) ratio rules will come into force on July 1, tying the amount buyers can borrow more closely to their incomes,” it said.
“The Reserve Bank has also warned that interest rates will stay higher for longer than previously forecast.”
However, OneRoof’s analysis said interests staying high for longer could benefit first home buyers as it could delay the next burst in rising prices.
“The loosening of the loan-to-value ratio (LVR) rules from July 1 is another plus for first-time buyers and will allow banks to do more low-deposit lending,” it said.
Ben Leahy is an Auckland-based journalist covering property. He has worked as a journalist for more than a decade in India, Australia and New Zealand.
