Falling house prices have put New Zealand ahead of the curve when it comes to the global market downturn, according to an international property consultancy firm.
The Knight Frank World House Price Index shows average house prices in 56 countries rose 10% a year in the three months to June, defying expectations of a noticeable slowdown.
But in New Zealand, prices rose 5.5% and, when adjusted for inflation, they fell 1.7%.
That pales in comparison to double-digit increases recorded by 25 countries, and left the country in 41st place in the rankings, down from second place at the same time last year.
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Turkey recorded the biggest increases at 161%, but Knight Frank researcher Kate Everett-Allen said that could be ignored as the country’s inflation was at its highest level in 24 years, at nearly 80%.
Slovakia and the Czech Republic took second and third place with respective increases of 25.5% and 23.5%. Additionally, in the top ten were the United States at 20.6% and Canada at 16.7%.
Australia was ranked 28th, down from seventh place this time last year, with annual growth of 8.9%, while the UK was 32nd with 7.8 %.
Everett-Allen said global housing markets had off-track commentators as 51 of the countries tracked posted year-on-year increases in the second quarter, despite storms on the economic horizon.
“Even when we look at the numbers for the past three months, that number only drops to 49 out of 56 markets. Perhaps we are premature with our doom and gloom and the inflection point will be next quarter.
“But in real terms, markets are feeling the pinch because, when inflation is factored in, prices averaged just 1.6% annual growth, down from 6.2% a year earlier.”
While the global picture was one of relative resilience, there were signs that the Asia-Pacific region was ahead of the downturn curve, she said.
Of the seven markets that saw prices fall between March and June, six were in Asia-Pacific. These were Hong Kong, South Korea, China, Malaysia, Australia and New Zealand.
Everett-Allen said New Zealand saw the biggest drop with prices down 3% on a three-month basis.
“New responsible lending laws and seven rate hikes since October 2021 have shifted buyer sentiment from a fear of missing out to a fear of paying too much.”
New Zealand’s two largest cities also fell in the rankings of Knight Frank’s latest Global Residential Cities Index, which tracks house prices in 150 cities around the world.
Wellington fell to last place (150) with an annual price drop of 12.2% in the three months to June, while Auckland was ranked 142 with a 1.9% drop.
This was a sharp turnaround from the third quarter of last year, when Wellington was second with price increases of 33.5% and Auckland was ranked 25th with a rise of 21.1 %.
In recent years, rising prices and a booming New Zealand market have attracted international attention, but that attention has now focused on its slowdown.
CoreLogic recently called it a “canary in the coal mine” and said its Australian counterparts are watching it to see what might happen in their own market.
In June, Bloomberg Economics said New Zealand’s “foamy” market made it the most vulnerable of 19 OECD countries to a hard landing.
But as misfortune surrounded the market as prices fell, experts said lower prices were not bad news and would benefit some.