May’s Cotality Home Value Index underscored the slow and inconsistent nature of the emerging recovery in property values – with regional markets showing a little more resilience, but some of the main centres looking weaker again.
Nationally, median property values dipped slightly by -0.1% in May, leaving them -1.6% below the same time last year and still -16.3% beneath the January 2022 peak. This monthly fall is relatively minor, but it does reinforce the idea that any upturn in the market is likely to be muted.
A Mixed Picture Across Main Centres
- Hamilton: +0.1%
- Dunedin and Tauranga: both edged down by 0.1%
- Auckland: -0.3%
- Christchurch: -0.8% (a notable drop after a period of growth)
By contrast, some regional markets showed a bit more resilience. Queenstown led the way with a +1.2% rise in May, reversing declines in the previous few months. Invercargill, Rotorua, New Plymouth, and Hastings also posted gains, suggesting that affordability and lifestyle appeal remain important factors in provincial areas.
Bigger Picture Perspective
Taking a bigger picture perspective, the really sharp falls in property values seen across many parts of the country since early 2022 do seem to have petered out, which is consistent with the drops in mortgage rates we’ve seen since the middle of last year. That will be bolstering households’ confidence as well as their direct financial positions too.
But the end of the downturn is not giving way to a sharp bounce-back in values either. After all, housing affordability has improved but it’s not yet back to normal. In addition, the stock of available listings in the market remains elevated, and this is putting the pricing power in buyers’ hands, or at least those who have secured their finance.
Economic Conditions
At the same time, the economy remains patchy. Some indicators have started to improve (e.g. manufacturing activity), but others remain sluggish – filled jobs, for example, dropped in April. The weakness of the labour market will be acting as a key handbrake on housing, given that people are naturally reluctant to commit to large purchases if their employment is a little insecure.
Of course, the subdued nature of the housing market needs to be put into context. Granted, some people would be hoping for stronger capital gains. But on the flipside, current conditions are proving favourable for first home buyers, especially since they’re still able to take full advantage of the low deposit lending allowances at the banks.
And many would-be property investors will be encouraged by conditions at the moment too, perhaps able to put in a ‘cheeky’ offer and secure a good yield at the outset and/or take more time to accumulate a better deposit without house prices surging away in the interim.
Looking Ahead
Looking ahead, 2025 remains ‘the year of conflicting forces’ in the housing market. Lower interest rates are providing some tailwinds, but economic uncertainty is a key headwind. The internal serviceability test rates at the banks are also falling, but borrowers remain cautious about taking out significantly bigger loans in relation to their incomes.
All in all, the market remains patchy, and even our already-conservative expectation for a 5% rise in national property values in 2025 could prove to be too high.
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!
