Property prices stop falling, suggesting downturn may now be over

Property prices are expected to start rising again in 2024, after new data suggested the downturn had come to an end.

New Zealand's median property price was unchanged in September, according to CoreLogic, ending a run of month-on-month price falls.

The national median has fallen 13.2% since peaking in March 2022, although it is still 24.3% higher than March 2020, when the pandemic began.

“It was only a matter of time until property values found their floor and then started to rise again, and it’s this emerging growth we’re starting to see in the data, although there’s quite a bit of diversity across the country,” CoreLogic Chief Property Economist Kelvin Davidson said.

“Housing market confidence seems to have turned a corner, supported by a rough peak for mortgage rates, high net migration flows, a still-solid labour market, and an easing in credit conditions.”

Mr Davidson predicted that once the election disruptions were completely out of the way, a clear upward trend would emerge, with sales and prices rising into 2024.

“That said, this emerging growth could be pretty muted by past standards, given that housing affordability is still problematic, mortgage rates aren’t set to fall anytime soon, and there’s also still the very real possibility of caps on debt-to-income [DTI] ratios next year.”

Mr Davidson said that if a feeling developed that DTI restrictions would be applied, some investors might bring forward purchases to avoid being blocked under the new rules.

“That could make things trickier for first home buyers for a while, after a period where they’ve enjoyed reduced competition from other buyer groups. But after any DTI restrictions are imposed, first home buyers may find conditions more to their liking again,” he said.

How have NZ’s biggest cities performed?

Across New Zealand, property values were unchanged in the month to September and fell 7.3% over the year.

For New Zealand's main cities, prices were:

• Auckland = up 0.4% monthly, down 9.3% annually.
• Dunedin = up 0.2% monthly, down 5.4% annually.
• Christchurch = up 0.2% monthly, down 3.1% annually.
• Hamilton = down 1.5% monthly, down 8.1% annually.
• Napier = up 1.2% monthly, down 7.3% annually.
• New Plymouth = down 0.9% monthly, down 3.8% annually.
• Palmerston North = down 0.2% monthly, down 7.8% annually.
• Rotorua = down 0.7% monthly, down 8.3% annually.
• Tauranga = down 1.2% monthly, down 8.8% annually.
• Wellington = unchanged monthly, down 9.6% annually.

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