House prices in New Zealand fell in June by the most in eight months, reinforcing the fact the market hasn’t yet reached a floor, despite interest rates reaching their peak.

Property values edged down 1.2% in June compared to the month before, and have now fallen for 15 consecutive months, according to a statement by CoreLogic New Zealand on Wednesday. This is the largest decline since a 1.3% drop in October. When looking at the previous year, prices fell 10.6% compared to 10.2% in May.

Buyers have taken a step back due to increasing home-loan interest rates and an economic slowdown, resulting in a sharp decline in property prices over the last 18 months. 

The Reserve Bank of New Zealand’s decision to signal no further rate hikes in the Official Cash Rate in May fuelled optimism of an improvement in the housing market in the second half of this year, Bloomberg reports.

“What the data is telling us is that housing market conditions remain diverse. While some markets may be moving through a trough in the cycle, others may have further to decline. We still believe it appears the worst of the downturn is generally over for most areas,” said CoreLogic NZ Head of Research Nick Goodall.

He added that overall properties for sale volume remains low. The weaker supply together with looser credit requirements, high net immigration and indications mortgage interest rates have peaked should bolster demand and eventually permit prices to rise.

Despite the ongoing decline in prices, average values have only reverted to levels seen in mid-2021 and are unaffordable for many, Goodall continued, signalling there will unlikely be a surge in demand or strong price rally.

CoreLogic went on to add that the average house price fell in June to NZ$911,222 ($560,000). House prices in Auckland declined 3% from May and are down 12.5% compared to the previous year.