Meanwhile, Auckland\u2019s average home value, unchanged in the May quarter at $1,198,000, was 22.3% below its previous peak.<\/p>\n
Wellington recorded a small amount of growth; its average home value increased by 0.2% this quarter to $910,286, but was 27.6% below its previous peak.<\/p>\n
\u201cTreading water. That was what the QV people said, and yeah, it\u2019s definitely some choppy water to be treading,\u201d Dann said.<\/p>\n
When you look at the falls in real (inflation-adjusted) terms, Auckland and Wellington are now down 35.5% and 40% respectively.<\/p>\n
\u201cIt\u2019s obviously helpful for first-home buyers that house prices are down,\u201d Parker said.<\/p>\n
\u201cAnd if people aren\u2019t just buying property for the sake of making a capital gain on it, they\u2019re looking elsewhere, maybe they\u2019re looking to invest in businesses and that\u2019s got to be good for productivity, for growth in the economy overall, rather than us just buying and selling houses from each other and hoping to make more money off it.\u201d<\/p>\n
But in the short term, the property slump was causing a lot of economic pain in the Auckland and Wellington economies, especially, she said.<\/p>\n
\u201cIt\u2019s just a giant hole in the economy,\u201d Dann said.<\/p>\n
\u201cWhen you look at building, construction and also all the [property-related] services, real estate, landscaping, tradies, all that stuff that goes around property and housing.\u201d<\/p>\n
The Property Council did a report which suggested the sector accounts for about 15% of total gross domestic product (GDP), the biggest industry in the country, Dann said.<\/p>\n
\u201cWe\u2019re a property-based economy. I know, you know, we like to think we\u2019re all sorts of things, we sell great dairy products around the world and all that sort of stuff, but in our domestic GDP, property just looms very large.\u201d<\/p>\n
This week, Dann and Parker also take a look at the downturn in non-residential construction and preview next week\u2019s first-quarter GDP release.<\/p>\n
Listen to the full episode<\/a> for the full conversation.<\/p>\n