Houses got cheaper by 0.7% in May

Property prices fell another 0.7% in May, putting them $121,000 below their peak, according to CoreLogic.

The fall marked an increased pace from April. However, the property data firm maintained that prices were likely to be approaching their floor.

Nationally, that put average values 10.2% lower than the same month last year, but still $194,000 higher than pre-Covid.

The CoreLogic House Price Index (HPI) is known to be more conservative than other measures, including a similar index from the Real Estate Institute, because it used three months of sales, which smoothed out recent trends.

CoreLogic head of research Nick Goodall said moderating house price falls and the latest Reserve Bank indication that the official cash rate (OCR) had peaked at 5.5% were all positives for house prices.

‘‘This has been an exceptionally fast and impactful monetary policy tightening cycle, and the Reserve Bank has effectively said now is the time to pause, and wait and see how this plays out, as mortgage holders continue to adjust to increased mortgage payments, reducing spending elsewhere in the economy.’’

Goodall said the current forecast peak might be more of an opportunity for the market to take a breath, rather than a hard ceiling. But the pause would be a comfort to the roughly 50% of borrowers due to roll off fixed interest terms in the next year.

‘‘Mortgage holders should now be able to quantify the worst-case scenario for their mortgage payments, which will give both them and their bank confidence in assessing serviceability test rates,’’ he said. ‘‘More vulnerable sectors are likely to include firsthome buyers who purchased around the peak of the cycle, who haven’t had the benefit of time to accrue equity in their home or a savings buffer, along with lowerincome households, where balance sheets are likely to be more thinly stretched.’’

In the main centres, Auckland house prices fell 0.8%, Wellington fell 0.7%, and Christchurch fell 0.6% – a reversal for the city, which had until recently bucked the price-fall trend.

Tauranga had another month of significant falls, with prices down 2.3% in the month. Hamilton prices fell 0.2%, and Dunedin prices stayed flat.

Goodall said that despite signs of moderation across parts of the country, all main centres’ prices had still fallen at least 1.9% over the last three months, including Christchurch.

Wellington remained the worst-performing market in recent times, with prices now more than 21% below the peak.