The level of house prices now sits just 1.1% above its most recent low last October.
The ANZ economists’ chart showed that June fall.
This chart shows house price changes in New Zealand. Source / ANZ
Softer housing market data and other broader activity indicators suggested the economic recovery was running out of steam, they said.
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Price weakness was widespread in June: 12 out of 16 regions recorded monthly falls, according to REINZ figures.
House prices remain well up from their low point around 2023 when interest rates were at their cycle peak but were showing no sign of moving to a position of strength, the report said.
One big feature of the recent housing cycle was an abundance of listings. The flow of new listings on to the market in June remained at the upper end of the range for this time of the year.
Data in recent weeks now suggested the economy may have shrunk in this year’s second quarter.
Council rates
The ANZ economists forecast territorial authority fees would continue rising, putting further pressure on households.
During the last four years, council rates rose 7% to 12% annually on average. Another big increase is set to occur this year. In the next few years, ANZ expects smaller yet still sizeable increases in these fees.
They also produced a graph showing how these charges were rising.
Total council operating expenses are shown in the steepest-rising line. Image / ANZ
Rates are not the only costs rising. Insurance, interest costs and maintenance are other factors hurting homeowners.
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Council rates inflation hit a record high last year, averaging 12.2% nationally, after three years of rises between 7% and 10%.
Yet the average rise from 1992 to 2019 had only been 4% to 7% annually, the report noted.
Recent rate rises had been underpinned by strained council finances.
Territorial authority deficits had increased after the pandemic, when expenses grew faster than the economy as a whole.
Overall, the report concluded that people who had owned their homes since before the pandemic were likely to still be sitting on large capital gains, with the median house price up around $180,000 from 2019.
Those who entered the market around its 2021 peak were likely to not have big capital gains.
Most homeowners’ running costs would have increased as inflation pressures hit council rates, insurance, maintenance and interest costs, the report noted.
Anne Gibson has been the Herald‘s property editor for 25 years, written books and covered property extensively here and overseas.