Property prices in the regions may be set to grow more quickly than the main centres.
Cotality, formerly Corelogic, has released its latest data, which shows property values nationwide dropped 0.1% in May and are now 1.6% lower than a year earlier.
Hamilton prices were up 0.1% in the month but Dunedin and Tauranga were down 0.1%. Auckland was down 0.3% and Wellington 0.4%. Christchurch was down 0.8%.
Invercargill was up 0.5% in the month, Queenstown 1.2% and Rotorua, New Plymouth and Hastings also reported growth.
“I don’t want to make too much of it but I think we’ve seen that little bit of a split between the regions and the main centres,” said chief property economist Kelvin Davidson.
“There’s a sense there is a gap opening up between the main centres and the regions. It’s probably just symptomatic of the market we’re in.”
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He said while there were some factors that applied everywhere, such as lower mortgage rates and a weaker economy overall, some provinces were benefiting from the comparatively stronger performance of the primary sectors.
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“Farming is doing pretty well, that might be driving a bit of spending in those areas and perhaps giving people a bit more confidence to be transacting in the housing market.”
By comparison, areas such as Wellington were still feeling the impact of public sector cuts and it would take a broader-based economic recovery to see house prices lift.
He said the May figures were a reminder that any housing upturn would be slow and variable for the time being.
“Lower mortgage rates are clearly going to be bolstering households’ confidence as well as their wallets, and there were signs of higher loan-to-value and debt-to-income ratio lending activity in the latest Reserve Bank figures.
“But it’s not one-way traffic. After all, housing isn’t necessarily affordable in absolute terms, while the economy and labour market remain subdued too. Indeed, filled jobs edged lower again in April. These are certainly restraints on buyers’ willingness to push ahead with property deals or to pay higher prices.”
He said the nationwide drop in values in May could be reversed next month.
“But anybody who was anticipating a sharp or widespread increase in property values as we got further into 2025 continues to be disappointed.
“The return to some kind of normality for sales volumes should start to eat into the overhang of available listings on the market in the coming months. But listings are starting from such a high level that buyers are likely to continue to have the upper hand for most of the year, with the associated restraint on house prices.”
He said, based on current trends, his previous forecast for a 5% increase in values nationwide this year could be a bit strong.
“Although the year still has quite a long way to run.
“Either way, a subdued or ‘balanced’ market is probably what we’ve been needing for a while now opportunities for different buyer groups, first home buyers and investors included, with reduced risk of prices running away from them again.”
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