Why the property market appears to be at or near the bottom

CoreLogic Chief Property Economist Kelvin Davidson has forecast that it's only a matter of time until the national average property price stops falling or even starts rising again.

It comes after a noticeable slowdown in price declines over the past three months:

• June = down 1.2% monthly, 2.4% quarterly, 10.6% annually.
• July = down 0.4% monthly, 2.3% quarterly, 10.1% annually.
• August = down 0.2% monthly, 1.8% quarterly, 8.7% annually.

Mr Davidson said the price floor is likely to be near, with many of the key fundamental drivers now turning around.

“It’s notable that mortgage rates are likely to now be close to their peak, although further small changes can’t be ruled out as global markets, and hence wholesale financing costs, remain a little jittery,” he said.

“On top of that, migration has significantly boosted property demand, and labour markets remain robust. We’re also now starting to see the impact of the loosening in the loan to value ratio rules from June 1st flow through to more low-deposit lending for both owner-occupiers and investors with a 35-40% deposit, who were previously locked out.”

How the major markets are performing

In Auckland, the city’s average property price fell to $1.255 million in August, which was 0.3% lower than the previous month, 3.8% lower than the previous quarter and 10.7% lower than the previous year.

Christchurch’s average price at the end of August was $732,000 – which was up 0.2% over both the month and quarter, but down 3.8% over the year.

Wellington’s average price fell to $891,000, down 0.3% over the month, 0.6% over the quarter and 11.8% over the year.

Hamilton’s average price at the end of August was $800,000, after falling 0.2% over the month, 0.7% over the quarter and 7.4% over the year.

In Tauranga, the average price fell to $1.019 million, after a monthly decline of 0.2%, quarterly decline of 0.4% and annual decline of 10.6%.

Dunedin’s average price at the end of August was $610,000 – down 1.1% monthly, 1.7% quarterly and 7.1% annually.

The national average property price has fallen 13.2% during this downturn but is still 24.3% higher than in March 2020, when the pandemic began. If Mr Davidson is right, prices are more likely to rise than fall from this point. So if you want to buy, it might be best to take action sooner rather than later, so you don’t have to pay a higher price. If you’re thinking about making a purchase, contact me and I’ll arrange a home loan pre-approval for you.