SunLive – New Zealand property values ​​fall

According to CoreLogic’s Hedonic Home Value Index (HVI), property values ​​in New Zealand fell -0.5% in October – their eighth consecutive fall.

Thus, the overall decrease in value since February was -5.1%.

The price across New Zealand is now $805,984, about 18% below the post-Covid cyclical peak, but still about 16% higher than pre-Covid levels since March 2020.

Around the main centers of Te Whanganui-a-Tara, Wellington fell -1.2% in October, while Kirikiriroa Hamilton and Tāmaki Makaurau Auckland fell -0.7%. Dunedin’s Otepoti was slightly smaller at -0.4%, while Tauranga was unchanged in October and Ōtautahi Christchurch was up 0.2%.

While the property market remained relatively sluggish in October, the rate of decline has roughly halved over the past couple of months after an average drop of about -0.9% from May to August.

Home Value Index

National and main centers

CoreLogic NZ chief property economist Kelvin Davidson said it could be a sign that a property value floor was approaching.

“The latest fall in the nation’s home values ​​suggests that while mortgage rates have already fallen quite sharply, the impact of job losses and the wider perception of declining job security are now playing a more important role. This is confirmed in the latest ANZ Consumer Confidence Survey. However, it is not one-way traffic for property values, with Ōtautahi Christchurch continuing to show relative resilience among the major centres, along with Tauranga in October.”

“It’s difficult to prove categorically, but there is definitely a sense that the Garden City continues to be considered an attractive location for people outside the area to move to, driven by both lifestyle and affordability.”

“The last few weeks have also seen a change in local sentiment around the wider Aotearoa New Zealand property market. This shift is being seen across many segments, from property appraisers to individual investors, developers and construction industry consultants.”

“The rise in sentiment may take some time to reach the ‘hard data’, but there is a sense that the end of the recent downturn is in sight.”

“For property investors in particular, lower mortgage rates are key, which directly correlates to improved cash flow on a typical rental purchase – or in other words, lower losses – and fewer top-ups from other income. Increasing the interest deduction also supports this effect.”

Tamaki Makaurau Auckland

Each of Auckland’s Tāmaki Makaurau submarkets saw a decline in property values ​​in October, although the declines in Papakura and Franklin were minor (-0.1%). Elsewhere, falls ranged from -0.4% in Rodney, to -0.8% in Auckland City and -0.9% in Manukau.

Broadly speaking, values ​​in Tāmaki Makaurau, Auckland, are still around 21-24% below the post-COVID peak (not counting a drop of almost 26% in Waitakere), while they have been falling since the recent “mini-peak” in beginning. this year have typically been between -7% and -9%.

Davidson added: “The Auckland property market continues to suffer from abundant supply, both in terms of existing properties for sale and ongoing new developments. However, in a market like Papakura there are signs that prices have started to level off to some extent, so it will be interesting to see if the fall eases or even stops in other parts of the super city over the next few days. also months.”

Te Whanganui-a-Tara Wellington

The wider Te Whanganui-a-Tara Wellington region fared the worst in October, with Porirua down -0.5% before the fall widened to -0.7% – -0.8% in the Hutt Valley and to more than 1 % on both Kapiti coasts. and Wellington City itself. Over the wider three-month horizon, Porirua was slightly more resilient than elsewhere, while the rest of Wellington saw values ​​fall by almost 3% or more since July.

“Wellington looks like a good example of how job insecurity outweighs the benefits to sentiment and household finances of lower mortgage rates. This could also make it an interesting test of property values ​​in terms of the strength of any recovery in 2025. against the backdrop of a weak labor market.”

Regional results

Reflecting the headwinds of lower mortgage rates and job losses, property value trends in many provincial markets remained mixed in October. Nelson, Whanganui, Rotorua and Gisborne showed increases, while Queenstown was stable. But drops of -0.7% or more were seen in Invercargill, Whangarei and Napier.

“Leaving aside the usual monthly fluctuations that you see anywhere in the cycle, it’s interesting to note the recent divergence for the year as a whole,” Mr Davidson said, pointing to areas such as Napier and Whangarei, where the decline was -7 . % to -9% since the last mini-peak, compared with Whanganui and Invercargill, which were down -1 to -2%.

“Lower house prices in the latter two regions may have given their markets some insulation. Of course, the affordability argument certainly doesn’t apply in places like Queenstown, where the market only fell marginally in 2024 despite an average price of $1.5 million.”

Real estate market prospects

While the recent slump in property values ​​in many parts of the country appears to be slowing and may be about to end, the chances of a sharp or sudden boom still appear relatively low, Mr Davidson said.

“Housing affordability remains a challenge, whether it’s people paying high rents and still struggling to save a deposit, or servicing a mortgage when they finally come up with the funds.”

“Additionally, the number of available properties on the market remains at a multi-year high and will take some time to subside, especially with a significant number of new builds still being completed.”

“Additionally, weakness in the underlying economy suggests the labor market may not bottom out for some time, continuing to dampen the impact of lower mortgage rates. While bank health check ratios may well continue to decline – thereby boosting household creditworthiness – the countervailing force of debt-to-income ratio restrictions may also become a more prominent factor in 2025.”

“Put simply, modest growth in property sales and values ​​in Aotearoa New Zealand looks likely over the next 12 to 18 months, while something like a post-COVID boom is not a plausible central scenario at this stage.”