The CoreLogic hedonic Home Value Index (HVI) showed that national median property values fell by a mild 0.2% in December, the ninth decline in the past 10 months (a run only broken by a flat result in October). The national value now stands at $803,624, which is 3.9% lower than a year ago and equivalent to a drop of around $32,200. New Zealand home values are also still 17.6% below the post-COVID peak, although 16.2% higher than the pre-COVID level from March 2020.
Around the main centres, a slightly more consistent picture might be starting to emerge.
Values in December:
- Hamilton raised 1.0%
- Tauranga raised 0.4%
- Dunedin raised 0.3%
- Christchurch held steady.
- Downward pressure in Auckland (-0.4% in December) and the wider Wellington area (-0.8%).
Abundant supply is still a significant restraint on property values in Auckland, both in terms of existing properties listed for sale, but also the flow of new-build stock being completed. Meanwhile, the public sector cut-backs in Wellington are no doubt having a negative effect on economic and housing market sentiment across the wider region.
Outside the main centres (and apart from Auckland and Wellington), a slightly more resilient picture may also be starting to emerge.
- Whangarei, Napier, and Palmerston North all edged up by 0.2%
- Nelson’s up by 0.1%.
Many ‘provincial’ markets have solid support at present from decent performance in the farming sector, especially dairying.
2024 In A Nutshell
December’s results really just sum up 2024 as a whole – patchy and generally still quite subdued across most of the country. Initially that was consistent with high mortgage rates, but more recently the subdued state of the housing market has reflected the weakness for employment, as well as the continued ‘overhang’ of available listings on the market.
That said, there’s still been a discernible slowdown in the rate of decline in recent months, potentially signalling that the floor for property values could be within reach. This would certainly be consistent with the influence of lower mortgage rates, particularly the falls for the internal serviceability test rates at the banks. The popularity of either floating loans or short-term fixes at present is helping those lower rates to pass through fairly quickly too.
What Lies Ahead in 2025?
Looking ahead, 2025 could prove to be a ‘year of conflicting forces’ in the property market. For example, there’s a supportive influence from lower mortgage rates. But on the other hand, restraint from abundant listings and labour market uncertainty.
The net result could be a relatively subdued upturn in sales volumes and property values. Although the price falls through most of 2024 could be about to come to an end, they might only rise by around 5% in 2025 across NZ as a whole, which would be pretty subdued compared to past cycles.
Another factor for the year ahead that the market hasn’t had to contemplate before is likely to be the effect of debt to income (DTI) ratio rules. These may not be an issue for everybody and won’t stop mortgage lending dead in its tracks. But by the middle of the year, it certainly wouldn’t be a surprise if the DTI limits are a common part of the general discussion around NZ’s mortgage market.
Overall, a sudden or strong upturn in property values across large swathes of the country still doesn’t seem particularly likely until the wider weakness of the labour market starts to turn around.
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!
