Source: Radio New Zealand
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Property values lifted slightly in April, says data firm Cotality, but any strength in the market will likely be challenged in the coming months.
According to Cotality’s data, the national median value of $809,101 was 0.1 percent up in the month and 0.6 higher than in January, but still 16.8 percent below the January 2022 peak of $977,643.
Dunedin rose by 0.8 percent in April, Christchurch and Tauranga both recorded a 0.4 percent increase, while Hamilton’s figure was 0.3 percent. Wellington and Auckland both recorded 0.1 percent falls.
Cotality chief property economist Kelvin Davidson said April’s small national value lift was a slight surprise.
“Given everything that’s been going on… these figures now relate to April, you’d think maybe there would have been a slightly softer result.
“0.1 percent is still fairly small, so whether it’s up or down, I suppose, is neither here nor there. It’s still within error margins, I’d say, so maybe a little bit surprised, but bigger picture, the housing market is still fairly flat.
“There’s been a little bit of growth to start the year, but we’ve seen sales volumes still quite soft. We know that economic indicators are going to weaken, if not already weakening, as well as mortgage rates going up.
“Those things will be restrictive for the housing market. You couldn’t rule out a slight rise in May potentially, but I think it’s more likely that, as we get through May, June, July, the longer this uncertainty goes on, the more the chance these small house price increases we’ve seen actually flatten out and possibly even go into reverse.
“It looks like we’re just set for another sluggish little period for the house sales and house prices, even if house prices have risen a bit to start the year.”
He said similar patterns were recorded in 2024 and 2025, when small upturns at the beginning of the year went into reverse.
“With Iran-related uncertainty currently very high, it would hardly be a surprise to see that pattern repeat in the next 3-6 months either.
“The bottom line is that the housing market broadly remains in a holding pattern, with buyers enjoying current conditions – or at least those that are secure in their jobs.”
He said, if interest rates continued to rise in response to inflation this year, it could have a bigger effect.
“We’ve seen the very strong experience, certainly post-Covid, that house prices and interest rates move in opposite directions.
“We saw, when interest rates fell sharply after Covid, house prices spiked and then we saw the opposite happen.
“The experience in the last 18 months to two years is that interest rates have come down again and house prices haven’t really reacted. That is a little bit of an anomaly, but during that period, we’ve also had a really weak economy.
“You’d probably still put a lot of weight on interest rates, but they don’t operate in a vacuum.”
He said job security was an important factor.
“I think that’s been the hindrance lately… mortgage rates have come down, but house prices have still stayed flat.
“Mortgage rates are now going up again, so you would think that would be a challenge for house prices, but in the meantime, we’ve simply got a continuation of that economic uncertainty, which – if anything – has been heightened in the last couple of months.”
Higher mortgage rates would also make it harder for new borrowers, he said.
First-home buyers have been a strong presence in the market in recent years.
He said many existing borrowers had been rolling off onto lower rates for a while, but that was often no longer the case.
“Those mortgage rates have probably passed through the system now, as existing borrowers have repriced. Potentially, now, we’re looking at slight increases.
“At the moment, the two-year rate seems to be very popular, but we probably are at a wee bit of a tipping point, where that influence of mortgage rate falls passing through the system has come into an end.”
Davidson said, while Auckland was flat overall, there was variability within the city. Papakura and North Shore both recorded some price growth, while Waitakere was weaker.
“The data remains patchy and the bigger picture is that values across the board are still lower than a year ago, with only North Shore’s decline from the peak currently sitting at less than 20 percent,” he said.
“The improvement in Auckland’s housing affordability may set the scene for a pick-up in value growth in the medium-term, but for now, it remains a purchaser’s market and first-home buyers, alongside smaller investors, continue to enjoy conditions.”
He said Wellington was among the weakest areas in the country. Upper Hutt was down 0.3 percent in the month.
Davidson said that was helping first-home buyers, who were more than 35 percent of the market.
“This apparent window of opportunity may not be there forever, but with economic and election uncertainty looking likely to linger for a while yet, Wellington’s property values may not move much this year at least.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
