The Cotality hedonic Home Value Index showed that national median property values edged up by 0.2% in October, following a rise of 0.1% in September. These increases followed five consecutive falls over April to August and it also needs to be noted that the recent rises are very small. But even so, upturns need to start somewhere (cliché alert) and the small rises in September and October would certainly align with the falls in mortgage rates over the past year or so.
The regional picture for property values remains mixed
Across the main centres, the picture remains a little mixed.
- Auckland saw another slight fall (-0.2%).
- Hamilton was flat.
- Tauranga and Wellington both ticked up by 0.2%
- Christchurch was up 0.4%
- Dunedin led the pack with a 0.7% increase.
Provincial centres mirrored the main cities’ patchiness.
- Nelson, Queenstown, and Invercargill posted monthly gains above 1%.
- Palmerston North, New Plymouth, and Whangarei saw modest declines.
In general, though, improved rural business returns have supported ‘regional’ property values, especially in a market such as Invercargill, which is now at a new peak.
If you would like a full breakdown of the Home Value Index in your region or city, click HERE
Lending and tax developments – good for investors on one hand, not on the other
The policy environment for property is also shifting, with the loan to value ratio rules set to be eased on 1st December. Given that owner-occupier lending is already operating well below the current 20% allowance for high LVR loans, a raised 25% cap doesn’t seem likely to do much in the short term – albeit some more pre-approvals could be available for first home buyers (given that banks can be more confident of having enough low LVR business to stay under % allocations).
On the other hand, the investor speed limit (just 5%) for high LVR loans is a lot tighter and more binding, hence the increase to a 10% allowance may well have an impact here. This could be another support for the recent comeback by mortgaged multiple property owners.
That said, as internal test rates at the banks fall, debt to income ratio restrictions will become an increasingly significant consideration for some investors – and now Labour has also come out with its capital gains tax proposal, at 28% from 1st July 2027 (if elected in 2026).
This could clearly be dodged for a while by simply not selling any property, and of course it’s also worth noting that in many other countries around the world – including Australia – CGT has not stopped house prices from rising. That said, although it may not necessarily collect much tax or massively improve housing affordability, it would lower investment property returns and could ultimately see some investors look elsewhere.
The near-term outlook
Putting all of this together, with house prices remaining 17% below the 2022 peak (and hence housing affordability having improved), listings starting to ease downwards, mortgage rates lower, and the economy poised to start recovering, property values are set to rise again in 2026.
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!
