The CoreLogic hedonic Home Value Index (HVI) showed that national median property values fell by a further 0.5% in October, the eighth drop in a row, meaning that values are now down by a total of 5.1% since February’s ‘mini peak’. The level now sits at $805,984, only around $2,300 higher than the cyclical low reached in June 2023 as the previous sharp downturn petered out.
To be fair, it’s also worth noting that values are still around 16% higher than the March 2020 (pre-COVID) level. But they remain about 18% below the peak at the height of the post-COVID boom.
Regional Variability in October’s Results
Once again, there was variability beneath the surface in October’s results, with the wider Wellington area dropping by 1.2%, and both Auckland and Hamilton by a further 0.7% apiece. Dunedin dropped by 0.4%, although Tauranga’s property values were stable in October, and Christchurch actually edged up by 0.2%.
It’s not easy to prove categorically, but there are still a lot of anecdotes floating around that Christchurch is retaining its ability to attract people from outside the area, pulled in by both lifestyle and affordability factors. That’s especially true if new residents relocating from other parts of the country are able to retain their previous job and work remotely for that higher Auckland or Wellington-based salary.
Reflecting the counteracting influences of lower mortgage rates but also creeping job losses, property value trends across many of the provincial markets remained patchy in October. Nelson, Whanganui, Rotorua, and Gisborne all edged higher, while Queenstown was stable. But value falls of 0.7% or more were seen in Invercargill, Whangarei, and Napier.
Labour Market Challenges Affecting Property Values
Taking a step back, the latest home value figures suggest that the property market hasn’t quite turned a corner just yet, and even though mortgage rates have already dropped quite sharply, the influence of job losses and the wider feelings of reduced job security are seemingly playing the more important role at present. In other words, labour market weakness seems to be restraining the property market even as finance gets cheaper.
That said, it’s also worth noting that the pace of decline in national property values has roughly halved in the past couple of months after an average fall of around 0.9% from May to August. This could be a sign of an approaching floor for property values, especially when you account for an apparent change in the on-the-ground mood around the market in the past few weeks. We’ve detected that shift across a range of segments, from property valuers to individual investors, to developers and construction industry consultants.
The Impact of Falling Mortgage Rates on Property Investors
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.
Property Market Outlook for the Coming Months
Looking ahead, it certainly wouldn’t be a surprise to see the recent falls in property values come to an end in the next few months, but the chances of a sharp or sudden boom still seem relatively low, with affordability still stretched, listings abundant, and jobs being lost. Debt to income ratio restrictions may well become a more prominent restraining factor in the next year or so too.
If you’d like to dive deeper into how property values are shifting in your area, CLICK HERE to access the latest CoreLogic House Price Index (HPI).
At The Mortgage Supply Co, we’re here to guide you every step of the way, whether you buying, selling, or refinancing. Reach out to our team today to discuss your unique situation and how we can support you in navigating the ever-changing property market!
