National prices fall, but increase in some individual cities

New Zealand property prices fell 0.4% in July, which was the smallest decline since the 0.3% dip in January and a significant deceleration from June’s 1.2% fall.

That took the fall in national values to 2.3% over the quarter and 10.1% over the year.

Looking at New Zealand's 10 largest cities, two experienced quarterly price increases:

• Palmerston North = up 0.1% quarterly, down 11.4% annually.
• New Plymouth = up 1.4% quarterly, down 3.3% annually.

The other eight cities experienced both quarterly and annual price falls:

• Auckland Area = down 4.3% quarterly, 12.3% annually.
• Christchurch = down 0.5% quarterly, 5.3% annually.
• Wellington Area = down 1.0% quarterly, 13.9% annually.
• Hamilton = down 0.7% quarterly, 8.5% annually.
• Tauranga = down 2.5% quarterly, 11.5% annually.
• Dunedin = down 0.6% quarterly, 8.5% annually.
• Napier = down 2.8% quarterly, 11.7% annually.
• Porirua = down 0.2% quarterly, 12.9% annually.

Why property prices may have bottomed out

CoreLogic NZ Chief Property Economist Kelvin Davidson said July’s drop in prices at the national level may seem surprising, given recent commentary about an emerging turnaround for the housing market, but this was the smallest decline in six months and prices rose in some markets.

“Market indicators started looking stronger in June and that positive momentum has continued in July,” he said. 

“There are several key factors pointing to the trough for house prices, including a broad peak for mortgage rates, albeit some further tweaks by the banks can’t be ruled out, an easing in the CCCFA [Credit Contracts and Consumer Finance Act] and LVR [loan-to-value ratio] rules, still-high employment and solid net migration flows. The easing in LVR policy has already helped more low-deposit investors into the market, such as those with 35-40% deposits, who were previously locked out.

“We’ve also seen a pick-up in the volume of sales, stock on the market is dropping, and this is likely starting to result in the re-emergence of competitive price pressures.”

Time will tell whether Mr Davidson is right and the property market has bottomed out. But if it has, now might be a good time to buy – before prices start rising again. Get in touch if you’d like to buy a home or investment property. I’ll compare interest rates for you and manage the loan application process from start to finish.