Property report: Auckland house prices fall for first time in two years

Auckland house prices have fallen for the first time in almost two years, with one inner city suburb dropping by more than $150,000.

City houses are now worth $1.55 million on average, with values falling 0.1 per cent during the first three months of this year, the latest OneRoof-Valocity House Value Index has found.

Mt Roskill homes in Auckland's inner south suffered the biggest falls.

The suburb's average house value fell 11.6 per cent or $166,000 in this quarter compared with the last three months of 2021 to hit a new $1.28m average price.

Values in Torbay, on the North Shore's northern fringes, also dipped, the April OneRoof-Valocity report found.

The waterfront suburb's average property value fell 6.4 per cent - or $97,000 - over the past three months to hit $1.41m.

Other big fallers included Te Atatu Peninsula, falling 4.8 per cent or $69,000, and Henderson where average values dropped 4.6 per cent or $55,000.

Across Auckland, 58 of the 276 suburbs fell in value, making the city New Zealand's worst performing housing market over the past three months.

James Wilson, from Valocity housing valuation and analysts, said booming housing price growth over the last two years had been driven by record low interest rates, but now the market had changed.

"This time interest rates are on the up and the housing market is tipped for further declines," he said.

It comes as New Zealand house prices experienced one of the biggest booms in the nation's history over the two years of the Covid pandemic.

Governments across the globe, fearing economic recession due to the virus, pushed interest rates down to record lows in order to encourage people and businesses to continue spending.

Home buyers responded by rushing to get bank loans.

Their demand for property helped lead house prices to, at times during 2021, jump as much 30 per cent higher than what they were a year earlier.

However, in recent months the tide has turned and home loans have become much harder to get.

That is due to rising interest rates and temporary Government changes to lending rules that made banks less willing to approve new home loans.

Valocity's Wilson said these factors led to the first quarter-on-quarter drop in Auckland's house values since the start of the Covid outbreak.

And further drops will likely follow, he said.

Auckland's house prices have fallen for the first time since the Covid pandemic started. Photo / 123rf

Evidence for that could be seen in even sharper price falls in March, where in the course of one month Auckland home values dipped 1.4 per cent or $22,000.

Nationally, however, house prices rose.

Nationwide average values are now 2.1 per cent higher than they were in the last three months of 2021, hitting $1.01m.

Yet, when looking only at March's prices, national house values actually fell by 0.27 per cent in the past month.

That augurs a wider slowdown in the national market, Wilson said.

Meanwhile, price drops in Auckland's Mt Roskill and its neighbouring suburb Mt Albert - where values fell 3 per cent or $50,000 to $1.61m - are likely linked to a slowdown in new building activity, he said.

Large portions of both suburbs are zoned by Auckland Council for intensification, leading developers to rush to buy homes in recent years that can be demolished and replaced with multiple townhouses or apartments.

However, tighter credit conditions, rising material and labour costs and lengthy supply chain delays had dampened demand among developers.

And these difficulties may get worse, Wilson said.

Mt Roskill, Torbay and Te Atatu Peninsula are the three suburbs with the biggest falls. Photo / 123rf

"Some developers may sell now before things get worse," he said, adding that even a handful of "fire sales" could have a big impact on overall property values.

Steve Hay, branch manager for Barfoot & Thompson Mt Roskill, backed this up.

He said a lot of properties had been selling in the $1.4m to $1.8m range in 2021 because they had sections that could be developed, but "there's not a heap of developers falling over themselves to buy the larger sections now".

He said another cause for the slowdown in his suburb is that some sellers are trying to sell homes for prices that buyers aren't willing to pay.

Part of this was a belief the market was still running hot and partly due to Auckland Council recently releasing its new council valuations in which the value of some properties were estimated to be 30 or 40 per cent higher than the last CV valuation in 2017.

"I'm getting offers at $1.05m and [vendors are telling me their] CV has gone up to $1.4m. They assume that's what their house is worth and it's 'um, no'," Hay said.

Valocity's Wilson said value drops in west Auckland suburbs, such as Henderson and Avondale were, on the other hand, more likely linked a drop-off in investors buying homes.

"Investors have been a lot more cautious than other buyer groups in these areas," Wilson said.

"They've basically stopped buying and the suburbs have softened as a result."