New Zealand’s property market continues to show signs of a modest recovery, with values nationally rising by +0.3% in April. This marks the fourth consecutive month of gains, bringing the median property value to $819,096. This is the highest level since June last year, although values remain about -16% below the January 2022 peak.
Looking at the data across the main centres:
- Hamilton was again a strong performer, with a +0.8% increase
- Christchurch with a +0.5% rise
- Auckland saw a +0.3% increase
- Dunedin, Wellington, and Tauranga each experienced a slight lift of +0.1%
Property values generally rose in other main urban areas as well as provincial markets too, although it’s not universal yet. Nelson and Hastings for example each fell by -0.5% or more in April.
What’s Happening by Property Type?
The Cotality (our new company name for CoreLogic) Home Value Index also allows for a rigorous analysis of different property types, due to the hedonic methodology which ‘builds up’ an overall value based on individual components such as land size, bedroom count, bathrooms etc. This breakdown of the figures shows that the emerging upturn is also evident across most segments, with flats (townhouses) up by +0.9% since January and standalone houses by 1.0%, although lifestyle properties have experienced a more minor increase of +0.2%.
What’s Driving These Changes?
So what helps to explain some of these patterns? Lower mortgage rates have clearly played a crucial role in supporting property values, providing buyers with the confidence and financial ability to enter the market. It’s conceivable that the recent global uncertainty surrounding tariffs and trade protectionism might lead to further reductions in interest rates.
Why a Big Boom Isn’t on the Cards?
However, another significant boom in property values seems unlikely. For a start, the flipside of global uncertainty is a still-subdued NZ economic backdrop and labour market. Meanwhile, the high stock of listings on the market gives buyers considerable power in price negotiations. Additionally, as interest rates for internal serviceability tests at the banks fall below 7%, debt-to-income ratios (DTIs) are becoming a more significant consideration for borrowers.
It’s probably also worth noting that we experienced a ‘mini upturn’ in property values during the second half of 2023 and the early months of 2024, which then partially reversed. This latest phase of growth appears to have stronger fundamentals (particularly lower interest rates), but the subdued economic backdrop remains a constraint.
What to Expect in 2025
Looking ahead, then, the recent modest pace of growth in property values remains consistent with our assumption that property values nationally will rise by around 5% in 2025. This rate of increase may seem subdued by past standards and also given that values are still about 16% below the record highs from early 2022. However, a period of more subdued price growth would obviously be welcomed by aspiring first-home buyers and investors who are working towards saving a deposit.
Of course, there’s also now a wider range of lending rules to negotiate than in the past, and the impact of DTIs on mortgage activity will be an interesting development to watch over the next year or two. DTIs aren’t fully binding yet, but will become a more significant factor as time passes.
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!
