House prices do not yet reflect the marked increase in consumer confidence following recent interest rate cuts.
On the contrary, our latest QV House Price Index shows values decreased nationally by an average of 2% throughout the three months to the end of August – a fraction of a percentage point more than in the July quarter. The average home is now worth $905,357, which is almost exactly the same as at the start of the 2024 calendar year.
“Home values have continued to slowly ebb and flow throughout the first eight months of 2024, but they are now effectively flat overall for the calendar year,” said QV operations manager James Wilson. “This is reflective of a housing market that has been severely constricted by strong economic headwinds – including rising unemployment, credit constraints and, of course, high interest rates.”
“Now that interest rates are finally coming down, we are seeing renewed interest in housing generally across the country. However, this won’t necessarily translate into home value growth while there’s such an excess of stock available for sale. Values will tighten again when prospective buyers aren’t as spoilt for choice as they are currently, which could take a while,” he added.
In the meantime, Aotearoa’s largest cities experienced the largest average home value declines this quarter. Home values in Auckland and Wellington reduced by 2.8% and 3% respectively, with the former recording its seventh consecutive month of negative growth. Hamilton (-1.7%), Tauranga (-1.5%), Christchurch (-1.3%) and Dunedin (-1.1%) also recorded modest quarterly home value reductions in August.
“An abundance of real estate listings – especially in and around our largest cities – is expected to keep a firm lid on home value growth, even as increasing numbers of buyers start coming out of the woodwork as we move into spring. Their prevailing mindset now seems to be one of cautious optimism, that we’re almost through the worst of it and now is a good time to see what’s happening out there in the market,” said Mr Wilson.
“Of course, we also expect to see even more real estate listings in the months ahead, as spring is traditionally when the real estate selling season starts ramping up again. More investors will look to sell properties following the changes to the bright line test back in July, and sellers who pulled their listings after trying and failing to sell earlier in the year may even look to try again now that there’s an uptick in activity and a general sense that confidence amongst buyers is increasing.”
Mr Wilson said this would continue to promote soft-to-flat value conditions nationally in the short term. “Spring has sprung and interest rates are coming down – but don’t expect to see house prices suddenly take off again soon,” he concluded.
Northland
The average home value has reduced across the wider Northland region by 3.7% this quarter.
The smallest average reduction was in Whangarei, where the average home value decreased by 2.6% this quarter to $720,741.
Kaipara had the largest average decline – down 5.1% to $817,350 – with Far North not far behind with a 4.7% quarterly reduction to $677,926.
Auckland
Just one of the Super City’s seven former local government areas is still showing a nominal amount of annual home value growth.
The average home value in Rodney is just 0.1% higher than at the same time last year at $1,224,613, despite a 3.3% reduction in the August quarter. All other areas are in the red annually, with Manukau (-2.6%) and Papakura (-2.7%) showing the largest average home value deficits over the last 12 months.
In the latest quarter, home values reduced by an average of 2.8% across the wider Auckland region – a slightly smaller quarterly reduction than the 3.4% decline recorded throughout the three months to the end of July.
Local QV registered valuer Hugh Robson said there were signs that the market may have bottomed out now, with mortgage rates starting to ease back and the arrival of spring.
“We’ve witnessed a slight improvement in the market over the past 4-5 weeks, with an increase in the number of sales in most suburbs – most notably on the North Shore and in east Auckland – and also a moderate increase in the number of listings,” he said.
“More developers, investors, and buyers in general are out there looking at properties now.”
Tauranga
Home values in Tauranga are now just 0.5% higher on average than at the same time last year.
It follows another quarter of negative growth, with the city’s average home value reducing by 1.5% to $1,015,296. This includes a small average decline of 0.4% during the month of August, marking three consecutive months of declines.
Waikato
The average home in the Waikato region is now worth the same as one year ago.
The latest QV House Price Index shows annual home value growth across the region is now sitting at precisely 0% on average. It follows another quarter of negative growth – 1.9% throughout the three months to the end of August 2024 – and four consecutive months of declines.
In Hamilton, the average home value is just 0.2% higher on average than at the same time last year. In the latest quarter, the city’s average value reduced by 1.7% to $774,685, compared to the 1.4% quarterly decline reported in our previous index.
Local QV property consultant Marshall Wu said the outlook for the housing sector remained complex due to declines in new dwelling building consents and mortgage rates.
“Vendors have become more active with real estate flowing onto the market at an above average pace through autumn and winter, particularly following the announcement of a cut in the OCR to 5.25% in August. The increased flow of advertised properties is testing the depth of buyer demand. However, as we head into spring, an uplift in market activity can be anticipated in the coming weeks,” he said.
“First-home buyers are benefiting from lower asking prices and reduced interest rates in the current market. While there is still an underlying mismatch between housing supply and demand, some rebalancing appears to be underway, suggesting a potential correction or an incoming soft-landing in house prices.”
Taranaki
It has been another quarter marked by slow decline in the Taranaki region.
Across the wider region, the average home has reduced in value by 1.3% this quarter – just 0.1% off the quarterly rate of decline reported in last month’s QV House Price Index.
In New Plymouth, the average home value has reduced by 1.4% to $711,009 this quarter. That figure is still 0.7% higher than at the same time last year.
Stratford recorded the largest average home value reduction this quarter at 4%, with South Taranaki almost breaking even with a minimal reduction of 0.1% on average.
Hawke’s Bay
Residential property values continue to diminish across most of the Hawke’s Bay.
The August quarter saw the average home value in Napier ($734,922) and Hastings ($769,447) reduce by 4% and 3% respectively. These are considerably larger rates of decline than the 1.8% and 1.1% reductions reported respectively in last month’s QV House Price Index.
Only Central Hawke’s Bay managed to buck the trend this quarter, with its average home value increasing by 1.2% to $580,318 throughout the three months to the end of August 2024.
Palmerston North
Home values in Palmerston North fared better than most this quarter, reducing by an average of just 0.8%.
The city’s average home value is now $635,441, which is still 2.1% more than the same time last year, but 1.1% less than at the start of 2024.
Local QV registered valuer Olivia Betts commented: “This economic environment highlights the complex factors influencing current housing trends, where property condition and financial accessibility are key in shaping buyer behaviour and market outcomes.
“We’re continuing to see a divide between different property types. Homes with older, outdated features are struggling to attract buyers and are often on the market for extended periods, whereas there’s been a noticeable rise in interest for homes that have been recently modernised, indicating a growing preference for updated amenities.”
“In the Palmerston North area, we have seen a steady pattern over the last 12 months. We expect this to continue throughout the remaining months of 2024,” she added.
Wairarapa
The average home in Carterton is now worth 0.9% less than at the same time last year. It follows an August quarter that saw its average home value reduce by 0.7% to $627,033.
Meanwhile, average home values remain 4.6% and 1.6% higher annually in Masterton and South Wairarapa respectively. This quarter, South Wairarapa’s average home value reduced by 1.9% to $744,472, while Masterton’s average home value reduced by 1.1% to $573,543.
Wellington
Wellington’s average rate of home value decline increased again this quarter.
Our latest QV House Price Index shows the region’s average home value reduced by 3% to $845,718 throughout the August 2024 quarter – compared to a 1.9% average decline in the three months to the end of July, and a 1.2% average decline in the three months to the end of June.
The quarterly rate of reduction also escalated across every district, with Hutt City (-3.9%) recording the largest deficit this quarter and Upper Hutt City (-1.4%) recording the smallest.
Local QV senior consultant David Cornford said the recent drop in the official cash rate and corresponding interest rate cuts would likely spark increased buyer interest – “but it’s not expected to translate into significant value gains in the near future”.
“As lower interest rates start to work their way through we should see a more balanced market start to develop. In the meantime, given the current economic and employment conditions in the capital, the majority of potential buyers are in no great hurry to make property decisions.”
“There continues to be a high number of unsold properties on the market and as we move into spring stock levels are likely to increase further. This gives buyers plenty of options and also bargaining power,” Mr Cornford said.
Nelson
Nelson is among just a handful of cities showing a nominal amount of home value growth this quarter.
Our latest QV House Price Index shows its average home value increased by 0.3% to $779,367 throughout the August 2024 quarter – compared to a 1.4% average decline in the three months to the end of July, and a 0.9% average decline in the three months to the end of June.
Marlborough also experienced a minor increase in average home value – up 0.1% to $712,143.
“Insurance challenges are also continuing to impact the local market. Properties with perceived risk are often being put through extended due diligence periods to confirm their level of insurance cover, with possible exclusions or heightened premiums for specific loss types. Properties with prior damage or claim history are typically being discounted by purchasers,” he said.
“Properties up to $700,000 in price are generally performing the best. This is typically the first-home buyer segment of the market. However, given the economic environment, some owner-occupiers are downsizing and therefore are competing with first-home buyers.”
West Coast
Low sales volumes are still causing residential property values to fluctuate up and down on the West Coast.
However, on an annualised basis, home value levels in the region are still looking relatively robust by national standards. They are 6.9% higher than the same time last year in Westland, 7.3% higher in Grey District, and 3.6% higher in Buller.
This is compared to a national average increase of 1.3% since the end of August last year.
Canterbury
Home values have continued to slowly ebb and flow across the wider Canterbury region this quarter.
The latest QV House Price Index shows home values have reduced across the wider region by an average of 1.1% throughout the three months to the end of August – compared to a 0.7% decline in the July quarter, and a 0.3% increase in the June quarter.
Hurunui (-4%) recorded the largest average home value reduction this quarter, followed by Christchurch (-1.3%) and Selwyn (-1.2%), while Ashburton (1.5%), Timaru (0.4%), and Mackenzie (0.3%) all recorded modest amounts of positive growth.
The average value of a home in the Garden City is now $760,929, which is 4.5% higher than at the same time last year. Across the wider region, only Ashburton (6.8%) and Timaru (5.7%) have experienced more growth over the past 12 months.
Otago
Property values have flattened across the Otago region.
Our latest QV House Price Index shows the average home value reduced across the wider region by 0.1% in the August quarter – the same rate of growth as in the July quarter. The average home value is now 6.6% higher than it was 12 months ago, and 3% higher than at the start of the calendar year.
Across the wider region, Queenstown (see below) experienced the most growth at 0.5% for the quarter, while Dunedin experienced the largest average home value decline at 1.1% for the quarter.
“Interest rate drops are now being seen across lenders, with the expectation that we should be in for further cuts to the OCR within 2024,” said local QV registered valuer Rebecca Johnston. “For now, though, it continues to be a buyers’ market.”
“Demand appears to have weakened somewhat for high-density new-build off-plan two-bedroom townhouses within the past several months, indicating this market is currently somewhat saturated. Developers have only recently introduced two-year rental guarantees, which have been established in other high-density townhouse development areas elsewhere in the country. Market weakening over the past four months for this sector is indicated between a range of 3.73% and 6.37%.”
Queenstown
Once again, Queenstown was one of just a handful of urban areas to record a minor amount of home value growth this quarter.
Its average home value increased by 0.5% to $1,836,236 throughout the three months to the end of August 2024 – slightly up on the 0.3% growth reported for the July quarter. That figure is 6% higher than it was 12 months ago and 3.3% higher than at the start of this calendar year.
Invercargill
Residential property values have slowly zigged and zagged in the Deep South.
Invercargill’s average home value reduced by 1.1% this quarter to $480,840, after earlier increasing by 1% and 0.4% in the June and July quarters respectively. That figure is 4.3% higher than the same time last year, and now just 0.7% more than at the start of 2024.
Local QV registered valuer Andrew Ronald commented: “The latest QV House Price Index shows values in Invercargill decreased by 0.6% compared to the previous month, which is the third small decrease in a row. The average Capital Value is now $480,840, dropping from a peak in March 2022 of $498,473.”
“Market conditions remain flat across all price brackets. There is still steady demand from first-home buyers, and investors are beginning to return to the market with the restoration of interest tax deductibility rules. Continued high interest rates appear to be limiting price growth,” Mr Ronald added.
