Property prices record first increase since March 2022

After a housing correction lasting almost 18 months, property prices are rising once again, leading CoreLogic to “confirm the end of the recent housing market downturn”.

New Zealand's median property price rose 0.4% in October, to $909,000, after remaining flat in September. That was the first rise since March 2022.

During that time, the median price fell 13.2% (or roughly $138,000), although it still finished almost 25% above the pre-pandemic median price of March 2020.

Meanwhile, prices rose in five of New Zealand’s six main centres between September and October:

• Hamilton rose 1.3% to $798,000.
• Christchurch rose 1.1% to $741,000.
• Dunedin rose 0.8% to $616,000.
• Wellington rose 0.3% to $893,000.
• Auckland rose 0.2% to $1.262 million.
• Tauranga fell 0.1% to $1.006 million.

CoreLogic NZ Chief Property Economist Kelvin Davidson said housing market fundamentals had been looking stronger for a while, but it was still early days in the recovery and conditions varied from location to location.

He also said the shift in voting to the centre-right seemed to have bolstered housing market confidence, despite mortgage rates edging higher again recently.

“We’ve also seen net migration rise to a new record high, which is boosting property demand,” he said.

“Another key factor in the housing market turnaround has been the continued strength of the labour market ... The resilience of employment has meant the vast majority of households have successfully managed to rejig their finances as they reprice from older, lower fixed rates, onto today's higher levels.

“The loosening in the CCCFA [Credit Contracts and Consumer Finance Act] rules from May and slightly relaxed LVR settings from June have both also played a role, while, at the same time, the flow of new listings remains low. 

“As a result, there’s been a re-emergence of some degree of competitive price pressures, as buyers attempt to secure a property in a market where there’s a bit less choice.”

What to expect in 2024

Mr Davidson said it seemed likely that prices would continue to rise in the coming months, although increases may not occur in every month and location.

“This ‘recovery’ could remain fairly subdued by past standards, given that housing affordability is still problematic, mortgage rates aren’t set to fall anytime soon, and that caps on debt-to-income ratios are still on the cards for 2024,” he said.

“However, the next six to 12 months could be really interesting, with some investors looking to buy again, with a view to their tax bills being lower in the future. That means first home buyers could have some new competitive headwinds on the horizon. But even with a smaller tax bill, low rental yields and high mortgage rates still make it tricky to get the sums to work on an investment purchase. As such, we don’t anticipate a full-scale return by property investors.”

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