The next property market upturn may be slowly building, according to CoreLogic.
In March, property values rose by 0.5%, which followed a 0.4% lift in February, and a flat result for January.
Property data analysts CoreLogic said this confirmed the market was now into its next phase of growth, and had come on the back of lower interest rates and “improved affordability”, after the previous value falls.
On the CoreLogic hedonic home value index, or HVI, the property value rise in March was the strongest since January last year.
Across the country, the average property value is now sitting at $812,195, the highest since June 2024. However, CoreLogic said, values are still down by 16.3% compared to the previous January 2022 peak.
“Around the main centres, Ōtepoti Dunedin (-0.1%) and Tauranga (0.0%) were still a bit more subdued in March, but Te Whanganui-a-Tara Wellington saw a +0.3% rise, with Tāmaki Makaurau Auckland up by +0.6%, Ōtautahi Christchurch +0.8%, and Kirikiriroa Hamilton at +0.9%.”
‘Confidence returning’
CoreLogic NZ chief property economist Kelvin Davidson said March’s result simply builds on the previous month’s rise, signalling the next phase in NZ’s property market has begun.
“The falls in mortgage rates since around July or August last year were always going to take a little bit of time to flow through to house prices, given the weak economic environment and subdued household confidence,” he said.
“The abundance of listings has been an extra limiting factor for property values, while some households on higher fixed interest rates from a year or two ago have also had to be patient before seeing their debt repayments drop.
“But the lags have now worked their way through the system and, with signs becoming clearer that the economy has started to turn a corner, confidence is returning to the property market.
Davidson said a fresh boom in house prices seemed unlikely, however — given additional restraints such as caps on debt-to-income ratios for mortgage lending.
“Undoubtedly, this cautious outlook will be welcomed by aspiring buyers who may have been concerned about property values rising beyond their reach again, provided that they can navigate the new credit rules in the first place.”
Davidson said property values might remain variable from month to month across regions in the medium term, noting the economy was not back to full growth mode.
He added buyers generally continued to hold the upper hand when negotiating on price, benefitting from the elevated number of listings that persisted across the market.
“That said, even though most aspiring buyers can still be quite picky about the properties they look at, we’re also now seeing the impact that lower interest rates can have in the property market again.
“Indeed, there’s now a broad consensus among analysts that national values will rise this calendar year by around 5% or perhaps a little more, with cheaper debt pushing housing prices upwards, but restraints such as the DTIs working in the opposite direction.
“In the context of past upturns and given that we’re still down around 16% from the post-Covid peak, the expected growth in values this year is fairly modest.”
Davidson added he had no doubt that some people might be disappointed by the outlook.
“But, as a country, we don’t get materially wealthier by trading houses amongst ourselves, and a period of flatter values will be happily accepted by many others.”
