The New Zealand property market faced a significant downturn in April as rising living costs, high interest rates, and recessionary pressures impacted demand.

New data from realestate.co.nz showed a nationwide decline in property demand, reflected by reduced searches and engagements per listing.

Nationally, searches per listing were down 10.4%, and engagements decreased by 7.5% compared to the previous year.

Regionally, 13 out of 19 regions experienced static or reduced searches, while engagements dropped in 11 regions.

"This indicates a cooling of buyer interest amid economic uncertainty. It is a significant shift as most regions have experienced year-on-year demand growth during 2024 until now," said Sarah Wood, CEO of realestate.co.nz. She attributed the decline to decreased consumer confidence in April, noting, "In response to the recession, buyers are understandably cautious."

Approximately 59% of New Zealand’s existing mortgages, by value, are up for renewal within the next 12 months.

Wood explained, “Those who fixed two years ago might soon move from interest rates of around 3.0% to around 7.0%. This is likely pulling liquidity from the market and dampening demand.”

Adding to the decrease in demand, stock levels were notably high last month, resembling figures from 2015.

The total number of homes available for sale increased by 18.1% compared to April 2023, reaching 33,815.

Additionally, new listings rose nationally by 34.9% year-on-year, a return to normal levels following an unusually low period in April 2023 due to weather events.

Since January 2023, the national average asking price has remained stable.

In April, it was $868,877, down a marginal 0.6% from the previous year and 1.8% month-on-month.

Wood noted that the national average asking price has stayed below $900,000 since December 2022, a significant decrease from the market peak in January 2022, when it exceeded $1 million.

During April, average asking prices were relatively stable, with 12 of 19 regions recording year-on-year changes of less than 5.0% up or down.

"As we move into the winter months, we typically see a cooling market, and in 2024, this is combined with a softening economy. It will be interesting to see how these factors play out for the property market in the coming months," Wood commented.

Despite the overall trend, some regions saw increases in average asking prices.

Central Otago/Lakes District and West Coast recorded year-on-year increases of 17.0% and 21.6%, respectively, although they represent different ends of the price spectrum.

Taranaki also saw a lift in asking prices, up 7.2% compared to last year.

The coming months will be critical for the New Zealand property market as economic conditions continue to influence buyer behaviour and market dynamics.