How much the housing market has gone up or down is always an estimate, although it is presented as something that is much more precise and certain than it really is. Two of the reasons there is no one right, precise number, is there is no central exchange for houses and an unknown, but different combination of houses is selling during different observation periods. In any event, there has generally been a significant drop in housing market values since the peak in late 2021, and they have continued to fall since the beginning of 2022.
With the above caveat of how much of an estimate these numbers really are, CoreLogic’s First Home Buyer Report for 3rd Quarter, 2022 shows the median price of a home in New Zealand is $720,000 in the Q3 2022, compared with $759,000 in Q1.
Queenstown is the only region to buck the trend, up approximately 5% since January of 2022. It now has an average home price of $1.7m.
While lower prices should make it easier for first-home buyers to get on the property ladder, tighter lending requirements are putting the brakes on many would-be owners.
Economists expect prices to keep falling. Real Estate Institute New Zealand (REINZ) marked the biggest drop in prices since records began in the early 90s.
Prices increased an estimated 45% over the course of the pandemic. However, note that a 50% increase only takes a 33% reduction to get back to where it started, because the second percentage, on the way down, is on a bigger starting number.
The upshot is most homeowners still have equity in gains generated over the boom, but those who have bought in the last 12-18 months could be substantially down, with negative equity for some.
Infrastructure Acceleration Fund
Housing Minister Megan Woods announced that the Government would invest over half a billion dollars in creating housing infrastructure for thousands of homes.
The announcement is part of the latest tranche of money from the Infrastructure Acceleration Fund administered by Kāinga Ora that was launched last year. Woods made the announcement while in Hamilton. The city stands to gain about a third of the money earmarked from the current round of spending.
Without saying they are to blame, we can observe the Labour Party has been in government at a time when construction costs have spiralled and house prices have nearly doubled. The lack of affordable housing is routinely described as a ‘crisis’ in the media and by politicians of all stripes. The promises of Prime Minister Jacinda Ardern while on the campaign trail, to oversee the building of 100,000 homes through Kāinga Ora, have fallen short. According to official information, as of May 2022, only 1,300 net KiwiBuild homes have been built, with more than 1,200 under construction across multiple developments.