When Chanel and Mose Atigi made the decision to put their family home on the market, their property was appraised at $NZ120,000 ($106,896) more than the price it sold for just four weeks later.
The couple live in Auckland — a city known as the "workhorse" of New Zealand's real estate market — where just a year ago buyers were easy to come by and reserves were easily met.
This market leads the nation's up and down house price cycles — as goes Auckland, so goes the rest of the country.
Right now, prices in the city are down 15 per cent from their 2021 peak.
With three boys and a five-month-old baby girl, Chanel and Mose decided it was time to leave the city and move closer to family, but that meant putting their house up for sale in a falling market.
"With Auckland the way that it is at the moment — cost of living is rather high — we found ourselves pretty much working to survive and not really enjoying time with our kids and our family," Chanel said.
"We were very nervous. When we first entered the market pricing was still pretty high and we just watched it dramatically drop over the period of our campaign.
"Every single week, we just saw it drop and drop and drop and it really did make us nervous, to the point where we didn't know if we could sell at the end of the day."
To Chanel's immense relief, the property sold at auction and after a "premium appraisal" above $NZ900,000, it closed at $NZ780,000. A price lower than their initial expectations, but also one they're very happy with.
NZ housing decline 'hasn't run its course'
Auckland properties surged in value until the middle of last year when the Reserve Bank of New Zealand (RBNZ) flagged it was likely to change course and start lifting the official cash rate to help bring inflation under control.
Last week, the RBNZ lifted the official cash rate again bringing it to 3 per cent.
New Zealanders have been dealing with the impact of higher interest rates since October, seven months before the Reserve Bank of Australia (RBA) started down a similar path.
Anecdotally sellers and agents say the market has slowed and a few key indicators tell us just how much.
While house prices in Auckland are now down 15 per cent from their peak last year, the national average is down 9.6 per cent by the same measure, according to Infometrics data.
The number of sales is down 45 per cent from the peak in late 2020 and the length of time it now takes to sell a property is as long as it's been in more than a decade.
For the real estate "super city", times have most definitely changed.
And in the RBNZ's update last week, it revised its forecast of just how far prices will fall across the country.
"The bank is now predicting a peak to trough of nearly 20 per cent," chief economist at Infometrics Brad Olsen said.
"So there are some big shifts in the housing market that have come through and there's an expectation that the housing market decline hasn't run its course yet."
From 12 inspections each weekend, to two
Steve and Nila Koerber are real estate agents and have seen firsthand how interest has dried up and how sentiment among buyers has changed.
In previous years, their agency would have sold about 500 properties, but this year they are on track to land somewhere between 350 and 380 sales.
When last year they each had six open homes every weekend, last weekend they had just two.
Steve admits he is a little worried as the couple must also now sell their own home.
"I'm pretty nervous about doing that, but we do guide our clients that if you buy and sell in the same market, everything should be OK. So we're just keeping that faith," he said.
Analysts and agents report a "stand-off" between sellers and buyers and a wide gap between their expectations of exactly where prices sit right now.
Chief economist at ANZ Sharon Zollner said there was not "a widespread expectation that they're bottoming out yet".
"There does still seem to be a feeling that there will be a better time to buy, that could change, but for now, that's certainly going a long way to suppress housing sales," she said.
"There seems to be a very wide gap between the expectations of buyers and sellers and so as a result, you're seeing low turnover."
Steve said as agents, there was more work to be done to ensure every possible buyer was really ready to buy, because if finance fell through there was no longer a list of people willing to make an offer.
"This time last year, a lot of buyers would have that confidence to go and bid at an auction and think to themselves, 'well I'm going to find the deposit, I'm going to sell my own home'," he said.
"Today, it's a little bit different. So we're having to get closer to them, ask them about their deposit, where it's coming from, have they got enough? So it's a whole set of different questions and different circumstances."
House price falls are 'incredibly orderly'
So far, New Zealand banks are not reporting high levels of mortgage stress, which is not to say that Kiwi households aren't feeling the pinch of rising costs of living and higher mortgage repayments.
But on paper, New Zealand mortgage holders have been stress tested at interest rates of 6 per cent, a number that is still higher than current retail rates.
"With the official cash rate headed to 4 per cent, then that would see mortgage rates surpass slightly the serviceability test rates that banks have used over recent years," Ms Zollner said.
At that point, "a small number of borrowers" who have large loans could struggle to repay them, according to Ms Zollner, but the other factor in New Zealand is the forecasted increase in wages.
In New Zealand, average hourly earnings are up 7 per cent, year on year, for workers in the private sector. That almost keeps pace with inflation, which is growing at 7.3 per cent.
Even with 15 per cent price falls in Auckland, there is little concern about New Zealanders being trapped with negative equity because this is a housing market that has grown at a "frantic" pace for several years.
"The Reserve Bank here estimates that less than 1 per cent of buyers would be in a negative equity position if house prices fell like they're forecasting because house prices have risen so dramatically," Ms Zollner said.
With examples like the Atagi family home in South Auckland, one could be tempted to talk about a house price crash, but Ms Zollner said the price falls in New Zealand have been "incredibly orderly".
"Someone made a little hole in the neck of the balloon and it's just very, very calm," she said.
"And it's ideal really because New Zealand house prices are way out of whack with any fundamentals. They certainly have the potential to fall much more dramatically, but that very strong labour market means very few people are in a must-sell situation.
"The air is just coming very quietly out of the balloon."
Despite selling as the market deflates, Chanel and Mose will walk away from their first home in Auckland knowing they held their nerve and got the best price they could — an amount that allows them to move north and raise their family with a level of security.
"Prices are dramatically lower than what they are in Auckland. So we're going to be feeling a lot more comfortable being up there," Chanel said.
"We got there in the end. We're happy with the result."
