On our quarterly index, which is based on agreed sales each quarter, national average house values recorded a fall in the COVID-affected Q2 period as a whole. Of course, price falls shouldn’t really come as much of a surprise, given the recession and rising unemployment. Ultimately we suspect that any further falls in prices will end up being smaller than in the GFC (and certainly the evidence from recent sales towards the end of June was stronger for prices), and there are already hints that some investors have begun to seek out a property bargain. 

The residential property market has bounced back relatively well from lockdown, with most measures of activity showing a steady rise since the end of April. The early evidence for property prices was also relatively encouraging. However, our quarterly index of values – which is based on agreed sales in each quarter – is now starting to show clearer signs of weakness, with Q2’s COVID-affected figures declining from pre-COVID Q1.

Indeed, based on these quarterly figures, the national average value of a house declined by 1.5% in Q2, with significant falls seen in Dunedin (-2.5%) and Auckland (-2.4%). As the first chart shows, Wellington and Christchurch recorded minimal declines in Q2, and Tauranga actually saw further increases. But the overall message is that the worm seems to have turned for property values in the main centres.

Source: CoreLogic