News & Research

Property downturn deepens, but important differences remain to GFC

Decade-low sales volumes and fast-falling home values have deepened the housing market decline however some key dissimilarities between the GFC-induced downturn and today’s exist, CoreLogic NZ’s Q3 Property Market & Economic Update reveals.

With stronger mortgage regulation, conservative lending practices and rising mortgage rates, further falls in property values are likely in the months ahead. The total value of residential real estate has already fallen from $1.73 trillion at its early 2022 peak to $1.62 trillion at the end of September 2022. Mortgages are secured against 21% of the total value, with the remaining 79% household equity.

CoreLogic NZ Chief Property Economist Kelvin Davidson said despite further falls in property values seeming likely in the coming months, there is a sense that the ‘mood on the ground’ has started to shift which could help sow the seeds of a floor for property values as soon as next year. CoreLogic’s Buyer Classification data has shown a steady rise in market share for first home buyers in recent months, albeit with the number of deals still low.

“Comparing the current downturn to the GFC, one big wildcard is low unemployment, and nobody’s expecting it to suddenly spike higher. Strong employment should help to keep a floor under home values, and be the difference between a correction and a more serious slump,” he said.

“In a wider context, the economy also continues to perform fairly well. Recession was avoided in the second quarter of the year and most indicators point to further economic growth in the near term, another variable to the GFC.

“Of course, this is also sustaining a degree of pressure on inflation, and forcing the Reserve Bank to keep raising the official cash rate, which is now likely to reach 4% by the end of the year, and potentially go even higher in 2023. In turn, we probably haven’t seen the peak for mortgage rates just yet, especially if global uncertainty also sustains the pressure on offshore wholesale funding costs and longer term NZ fixed mortgages,” he said.

Sales volumes

Activity levels have remained very weak in the past three months, and you need to go back about a decade to see sales conditions this soft, Mr Davidson said.

“Days to sell has also risen, as vendors aren’t generally being forced to sell and buyers aren’t in any rush either – knowing that they have the pricing power and plenty of choice amongst the existing stock of listings, which has begun the seasonal spring rise,” he said.

“On the plus side, easing of the CCCFA rules may allow more people to access the market who might otherwise have been turned down for a loan.


New Zealand’s property values have fallen by a total of 6.3% over six successive months, with the average home price now under the million dollar mark, at $977,158, down from $1,018,770 at the end of the last quarter and a peak of $1,043,261.

“Overall, this downturn in property values seems set to run into 2023. But it wouldn’t be a surprise to see a floor for values next year, before some kind of recovery potentially begins in 2024 which would be a swifter recovery timeframe than seen following the GFC,” Mr Davidson said.


Reserve Bank (RBNZ) gross mortgage lending activity data across new loans, top-ups, and bank switches remained sluggish in recent months. The total value of gross lending was $5.4 billion in August.

“This is significantly lower than the same month last year which was above $8 billion, and in fact was the lowest figure for the month of August since 2019. Moreover, when measured by the number of loans (15,109), activity was the weakest since at least 2013.

It’s clear that both investors and owner-occupiers are struggling, with lending continuing to fall in line with our own Buyer Classification data, albeit with some signs of a pick-up for first home buyers lately.


“Looking ahead, the rest of 2022 and into 2023 looks set to remain a testing time for market activity levels. After all, the economy remains a little fragile, net migration could stay relatively subdued (even as the borders fully reopen), and on top of that, credit conditions remain restricted and mortgage rates continue to rise. All of these factors point to further restraint in terms of property sales.

“On the whole, challenges remain, but after a weak 2022, our working assumption is that sales volumes rise gradually in both 2023 and 2024, as mortgage rates eventually peak and then perhaps begin to decline a little again,” he said.

Download the latest CoreLogic Property Market and Economic Update


CoreLogic New Zealand

CoreLogic New Zealand

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