There weren’t any major surprises in the Cotality Home Value Index for July, with property values across the country generally still pretty subdued. Mortgage rates are down and sales activity is steadily rising, but the ‘overhang’ of listings on the market (albeit slowly dropping) continues to put pricing power in buyers’ hands. The weakness of the labour market is a headwind too.
A mixed bag in the economy and the housing market
Nationally, median values edged down by -0.2% in July, matching the modest annual decline and bringing the level to $819,921.
The regional picture reinforces this patchy/mixed backdrop:
- Auckland and Dunedin were the weakest of the main centres in July, both down by -0.6%
- Wellington dipping by -0.2%
- Christchurch saw a minor -0.1% declineÂ
On the other hand:
- Hamilton was up by +0.4%
- Tauranga by +0.9%, although annual growth remains subdued at just +0.8%.
Provincial areas showed slightly more resilience.
- Gisborne dropped -1.3%
- Hastings, Whangarei, and New Plymouth all rose by at least +0.5%.
It’s too early to conclude that a clear divergence is opening up between regional areas and the main centres, but it does need to be noted that the primary industries are faring better than other parts of our economy, such as services/hospitality.
The longer this two-speed economy continues, the greater the chances that regional house prices perform a little more strongly, although they may not boom in absolute terms.
Big decisions for borrowers
In this subdued environment, some property owners and would-be sellers may not be feeling as confident as otherwise, but of course it provides opportunities for others. In particular, first home buyers remain active, and mortgaged investors remain on the comeback trail too – driven by smaller players, i.e. the ‘Mums and Dads’, who are starting to look again at existing properties (although new-builds are still popular) and in the bottom half of the market in terms of prices/values.
Regardless of the buyer type, however, anyone looking at a mortgage at the moment is facing some delicate decisions. For a start, there’s evidence in the Reserve Bank data that borrowers are still ‘hedging their bets’, putting some debt on floating rates but also locking in a 1-2 year fixed rate too, whether they’re a new borrower or somebody repricing an existing loan(s).
On top of that, there’s a decision about which lender to choose in the first place. Indeed, June’s data showed a record number of existing borrowers switched bank, no doubt tempted by the cashbacks still being offered. But the structure of debt, with a lot on floating or short fixed rates, means they can do so more easily too, without the risk of high break costs or fees.
More of the same?
All in all, the rest of 2025 could well look pretty similar to the first seven months of the year – lower interest rates helping to boost lending volumes, property sales, and households’ budgets, but a degree of caution amongst buyers still keeping a lid on house prices.The next official cash rate decision on 20th August could see a cut to 3%, which may support sentiment. However, mortgage rates may already be near their floor, and the broader economy is still struggling to gain momentum.
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!
