Falling house prices have put New Zealand ahead of the curve when it comes to the global market downturn, an international property consultancy says.
The Knight Frank Global House Price Index shows that average house prices across 56 countries were up 10% annually in the three months ending June, defying expectations of a notable slowdown.
But in New Zealand prices were up 5.5%, and, once adjusted for inflation, they were down 1.7%.
That paled in comparison to the double-digit increases recorded by 25 countries, and left the country at 41 in the rankings, down from second place at the same time last year.
* The good, the bad, and the reality of falling house prices
* Goodbye capital gains: Here’s where house prices have fallen more than 16%
* Property downturn picks up pace but ‘green shoots’ may be emerging
Turkey had the biggest increases at 161%, but Knight Frank researcher Kate Everett-Allen said this could be ignored as the country’s inflation was at a 24-year high of almost 80%.
Slovakia and the Czech Republic took out the second and third places with increases of 25.5% and 23.5% respectively. Also, in the top ten were the United States at 20.6% and Canada at 16.7%.
Australia was ranked at 28, down from seventh place this time last year, with 8.9% annual growth, while the United Kingdom was at 32 with 7.8%.
Everett-Allen said global housing markets had wrong-footed commentators, as 51 of the countries tracked had annual increases over the second quarter, despite the storms on the economic horizon.
“Even when we look at the figures over the last three months, that figure only drops to 49 of the 56 markets. Perhaps we’re premature with our doom mongering and the inflection point will be next quarter.
“But in real, terms markets are feeling the pinch as when inflation is taken into account, prices were averaging just 1.6% annual growth, down from 6.2% a year earlier.”
While the global picture was one of relative resilience, there were signs the Asia Pacific region is ahead of the slowdown curve, she said.
Of the seven markets that saw prices decline between March and June, six were in the Asia Pacific. They were Hong Kong, South Korea, China, Malaysia, Australia, and New Zealand.
Everett-Allen said New Zealand had the biggest decline with prices down 3% on a three-month basis.
“New responsible lending laws and seven rate rises since October 2021 have shifted buyer sentiment, from a fear of missing out to a fear of overpaying.”
New Zealand’s two biggest cities also plummeted down the rankings in Knight Frank’s latest Global Residential Cities Index, which tracked house prices across 150 cities worldwide.
Wellington fell to the bottom spot (150) with a 12.2% annual price decline over the three months to June, while Auckland was ranked at 142 with a 1.9% decline.
That was a sharp turnaround from the third quarter of last year when Wellington was at number two with price increases of 33.5%and Auckland was ranked 25 with a 21.1% rise.
In recent years New Zealand’s escalating prices and booming market have attracted international attention, but that attention was now focused on its downturn.
CoreLogic recently labeled it the “canary in the coal mine”and said its Australian counterparts were watching it to see what might happen in their own market.
But while doom and gloom surrounded the market as prices fell, experts have said lower prices were not all bad news, and would benefit some.