Property values across the country saw another drop during October, according to new CoreLogic numbers, but there could be signs “of an approaching floor for property values”.
According to CoreLogic’s latest hedonic Home Value Index, property values in New Zealand fell by -0.5% in October, the eighth drop in a row. This means property values have declined by -5.1% since February.
The average value in New Zealand now sits at $805,984, around 18% below the post-Covid cyclical peak but still 16% higher than the pre-Covid level from March 2020.
Wellington was the main centre that saw the biggest drop in October, falling -1.2%. Both Hamilton and Auckland dropped -0.7%, while Dunedin saw a slightly smaller drop of -0.4%. Tauranga was flat, while Christchurch saw an increase of 0.2%.
CoreLogic said the pace of decline had roughly halved over the past couple of months, following an average fall of around -0.9% between May and August.
CoreLogic NZ chief property economist Kelvin Davidson suggested this could be a sign of an approaching floor for property values.
“The latest fall in national home values suggests that even though mortgage rates have already dropped quite sharply, the influence of job losses and the wider feelings of reduced job security are playing the more important role at present,” he said.
“This was echoed in the latest ANZ consumer confidence survey. That said, it’s not all one-way traffic for property values, with Ōtautahi Christchurch continuing to show relative resilience amongst the main centres, alongside Tauranga, in October.
“It’s hard to prove categorically, but there’s certainly a ‘vibe’ out there that The Garden City is still considered an attractive place for people outside the area to relocate to, driven by both lifestyle and affordability.”
Davidson said there had also been a change in mood on the ground around New Zealand’s wider property market over the past few weeks.
“That shift has been seen across a range of segments, from property valuers to individual investors, developers and construction industry consultants,” he said.
“Rising sentiment may take sometime to hit the ‘hard data’, but there’s a sense that the end could be in sight for the recent downturn.
“For property investors in particular, the falls in mortgage rates are key, flowing directly through to better cashflow on a typical rental purchase – or in other words reduced losses – and smaller top-ups from other income. Increased interest deductibility supports that effect too.”
Despite the flat prices, realestate.co.nz figures also released this morning show a willingness by property owners to go to market.
It found that in October, stock levels had hit an “unusual peak”, with more than 32,000 properties available nationwide — an increase of 26.3% year-on-year and a 7.7% rise from September.
Values decline in Auckland
In New Zealand’s biggest property market, Auckland, the city’s sub-markets saw a range in value drops.
The biggest drop was seen in Manukau, which fell -0.9% in October. This was followed by Auckland City, which fell -0.8%. The falls in Papakura and Franklin were marginal at -0.1%.
Property values in Auckland were still around 21-24% lower than the post-Covid peak. Falls in a more recent “mini peak” at the start of the year were typically between -7% and -9%.
Davidson said Auckland’s market continued to be weighed down by an “abundant supply” of homes for sale and completed new builds.
“However, there are signs in a market such as Papakura that values have started to flatten out to some degree, so it’ll be interesting to see if the falls also lessen or stop altogether in other parts of the super-city in the next few months too.”
Wellington ‘underperformed’ in October
CoreLogic found the wider Wellington area had “underperformed” in October.
Porirua was down -0.5%, while the Hutt Valley saw falls increase from -0.7% to -0.9%. Values in both Kapiti Coast and Wellington were down -1.2% and -1.5%, respectively.
Porirua was “slightly more resilient” than other regions over a three-month horizon, dropping -1.0%, while the rest of the region saw values down by close to 3% or more since July.
“Wellington looks to be a good example of where job insecurity is outweighing the benefits to sentiment and households’ finances of lower mortgage rates.
“This could also make it an interesting test case for property values, in terms of the strength of any recovery in 2025 amidst the backdrop of labour market weakness.”
Regional values remain ‘patchy’
Across regional New Zealand, lower mortgage rates and job losses were “counteracting influences” that saw these markets remain “patchy” in October.
Nelson, Whanganui, Rotorua, and Gisborne “edged higher” in October, while Queenstown remained “stable”. Falls of -0.7% were seen in Invercargill, Whangārei, and Napier.
“Putting aside the normal monthly variability that you see in any part of the cycle, it’s interesting to note the recent divergences over the year as a whole,” Davidson said.
He pointed to areas like Napier and Whangārei, which were down -7% to -9% since the last mini-peak. This was compared to Whanganui and Invercargill, which were down by -1% to -2%.
“Lower house prices in the latter two areas may have given their markets some insulation. Of course, the affordability argument certainly doesn’t apply in somewhere like Queenstown, where the market has only fallen slightly in 2024 despite a median value of $1.5m.”
Downturn in property values ‘slowing’
Looking ahead, Davidson said the recent downturn in values could soon be over, but the chances of a sharp or sustained boom seem “relatively low”.
He said housing affordability remained challenging, “whether that’s for people paying high rents while still trying to save a deposit or servicing the mortgage once they’ve finally got the funds together”.
The number of available listings on the market also remained at multi-year highs. Davidson said this would take some time to dissipate, “especially with a solid number of new builds still being completed.”
“On top of that, the weakness of the underlying economy suggests that the labour market may not bottom out for a while yet, continuing to dampen the influence of lower mortgage rates.
“Although banks’ serviceability test rates may well continue to trend downwards – which would raise households’ borrowing capacity – the counteracting force of debt-to-income ratio limits could also become a more noteworthy factor in 2025.”
He said a “modest” upturn in property sales and values across New Zealand looked “fairly likely” in the next six to 18 months. Something similar to the post-Covid boom was not a plausible scenario “at this stage.”
