The CoreLogic hedonic Home Value Index (HVI) showed that national median property values fell by a further 0.4% in November, the ninth decline in a row. Values now stand at $800,795, which is 3.5% lower than a year ago, equivalent to a drop of around $29,100. They’re also still 17.7% below the post-COVID peak, although 16.0% higher than the pre-COVID figure from March 2020.
Regional Variations in Property Values
Around the main centres, the results remained a bit patchy in November:
- Wellington dropping by 1.0%
- Hamilton down -0.5%
- Auckland down -0.4%
- Tauranga was flat
- Christchurch up by 0.1%
- Dunedin rising by 0.4%.
However, it’s still fair to say that market conditions in neither Christchurch nor Dunedin are strong in an absolute sense.
It was a mixed bag across provincial markets too:
- Nelson rose by 0.3% in November
- Hastings edging up by 0.2%
- Both Palmerston North and Rotorua flat.
- By contrast, after a period of resilience, Queenstown dipped by 0.8%, with Gisborne and Whangarei both falling by 0.9%.
In many ways, the latest data points to a market that remains in a ‘holding pattern’ to some degree; not falling to any significant extent, but not rising emphatically either. Indeed, the rate of decline in property values across the country has slowed lately, from an average of 0.8% per month from April to August, back down to an average of 0.3% falls over September to November. That might signal a floor for values is getting closer, but it’s not here yet.
Drivers in the Market
So what might explain this lack of clear direction in the market? Ultimately, some of the key underlying drivers are pointing in opposite directions.
Falling Mortgage Rates
On one hand, mortgage rates have fallen steadily and are set to continue to drop next year, as the Reserve Bank looks to move the official cash rate back towards its neutral/normal level. This of course benefits new borrowers, but the pass-through to existing borrowers’ actual repayments will also be brisk, given that around 10% of mortgages are floating and another 40% are set to roll onto a new fixed rate within six months.
Challenges for Buyers
But although lower interest rates will be supporting market sentiment, activity, and pricing, there are significant challenges too:
- Listings remain elevated, and this has meant pricing power remains firmly in the hands of buyers – a natural restraint on any rises.
- The labour market remains weak, with employment falling and the unemployment rate set to rise further in the near term. Even for people who have kept their job, the reduced feelings of security can also weigh on their housing market activity.
Outlook for 2025
Looking ahead to 2025, lower mortgage rates and a return to modest GDP growth should see property sales volumes continue to rise. In turn, that will help to bring down the stock of listings available on the market, and contribute to a rise in property values.
But the flipside of easing monetary policy and lower market interest rates is that the banks’ internal serviceability test rates are also falling, and getting a lot closer to the point where the debt to income ratio rules could become a greater consideration for borrowers. The tendency for DTIs to restrain borrowers’ capacity to get larger loans – even if they could technically afford it – is a key reason for caution about how fast the housing market might rise next year.
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!
