The downturn in the housing market is close to the fastest rate in nearly 14 years.
House values fell another 1.8 percent in August, according to CoreLogic's House Price Index. Photo: RNZ / Marika Khabazi
CoreLogic's House Price Index, which measures changing property values, indicated the pace of decline was picking up, with values falling another 1.8 percent in August, twice the rate of July's 0.9 percent drop.
CoreLogic head of research Nick Goodall said the three-month fall of 3.5 percent was heading to depths seen in the global financial crisis in August 2008, when annual values fell 4.4 percent.
Expensive and restrictive credit conditions were driving the market downturn which could be seen throughout the country, he said.
Reduced demand for mortgages was driving interest-rate competition between banks.
"The already-smaller pool of would-be buyers, due to tighter, more expensive credit, are happy to bide their time in the falling market," Goodall said.
Wellington was the first major centre to drop into negative territory last month, however August's annual figures showed Auckland, Dunedin and other main urban areas had now joined it.
Christchurch was proving more resilient with values still 16 percent up on the same time last year.
"Consumer sentiment has shown signs of bottoming out, probably helped by recent falls in short-term interest rates and whispers of a market trough approaching for some markets," he said.
"The borrowing environment remains tough, though, and along with stretched affordability off the back of increasing interest rates, a firm bounce-back in values is not expected."
"The market is so linked to interest rates, to affordability," Goodall told Morning Report.
"So I suppose the one green shoot is perhaps there's expectation that interest rates are close to peak and as soon as they do hit peak and start to drop again, maybe next year, then there is a chance that these values will stop falling.
"Not expecting a significant bounce-back by any means, but certainly things on the horizon which say that prices might stop falling, perhaps later this year and into 2023."
More properties generally go on the market in spring, and with higher supply prices were less likely to grow. But the key thing was sentiment and people's expectations, he said.
"Sometimes we can talk ourselves into a downturn but we can also talk ourselves into that upturn as well, so that'll be an interesting one to watch."
A strong labour market, with low unemployment, was helping homeowners with rising mortgage repayments. Credit arrears remained low according to credit agency Centrix and the Reserve Bank.
Mortgagee sales also remained low, and well below the peak of 777 in three months ended June 2008.
