New Zealand’s housing market has endured a tough Winter, with values falling again in August. The Cotality hedonic Home Value Index (HVI) fell by -0.2% over the month – clearly a small decline, but nevertheless the fifth in a row. The fall over the year to date has been -0.6%, with the modest gains seen over the final few months of 2024 now fully reversed.
The nationwide median value is $809,113, which is still up by around 17% from the March 2020, pre-COVID level, but also -17% down from the early 2022 peak. In short, the sharp post-COVID downturn has petered out, but we’re certainly not seeing steadier gains yet either. Indeed, values are as flat as the Canterbury Plains and as chilly as one of those frosts.
The regional story
Across the main centres, property value patterns remain variable, by region and from month to month. For example, Auckland dipped by -0.5% in August, with fairly uniform declines across each of the key sub-markets (i.e. the ‘old’ council areas, such as North Shore or Waitakere). The wider Wellington area also edged down by -0.1%, as did Hamilton, but Christchurch inched up by 0.2% and Dunedin recorded a 0.4% lift. Tauranga remained flat with no change.
Outside the main centres, there are continued hints that the resilience of the primary sector is bolstering property activity and prices in a number of provincial markets – albeit not everywhere. For example, Nelson, Invercargill, and New Plymouth all saw values rise by 0.5% to 0.6% in August, although Gisborne, Hastings, and Napier experienced falls of a similar magnitude.
Two key factors to watch
There’s always plenty to keep an eye in terms of the reasons why these patterns are occurring, which currently include a generally cautious attitude from both buyers and sellers, as well as the weakness of the underlying economy and labour market.
But to my mind, there are two other aspects that stand out as factors to watch at present:
- Individual borrowers’ decisions in terms of the rate they choose but also the lender.
- As mortgage rates continue to edge lower, what we’re seeing in the data is ‘hedging’, with many borrowers opting for some longer term fixed debt, but also keeping some on a shorter/floating rate to try and get the bottom of the cycle.
- June and July have both set new records for the number of existing borrowers switching banks, as they chase those cash-backs. The short-term structure of a lot of existing mortgages suggests this switching activity could remain high for a while yet.
- The balance of sales versus new listings as we go through Spring.
- Lately, sales volumes have returned to some kind of normality, and this is eroding the stock of listings on the market. If sales can continue to outweigh the weekly flows of new listings, even as the latter goes through the normal seasonal lift over the next few months, buyers may continue to lose some of their pricing power as we get into 2026.
The chill may not last too much longer
In summary, 2025 will probably go down as a flat year for property values. But as we get into 2026, a bit more growth is looking likely; not a boom (DTIs will still play a role), but stronger gains than 2025.
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!
