The Cotality Home Value Index (HVI) edged up by 0.2% in March, matching the rise seen in February. This run of two consecutive increases (albeit modest) could potentially signal a change in the market trend, which would certainly be consistent with early hints of an economic upturn and the falls in mortgage rates since mid-2024. Of course, the Iran conflict is throwing an extra layer of uncertainty over everything at present.
The detail of March’s results: more provincial resilience
Taking a look at the main centres, the value trends were a little divergent in March.
- Hamilton and Wellington both dipped by a minor -0.1%
- Tauranga and Auckland were flat.Â
- By contrast, Christchurch was up by 0.6% and Dunedin by 0.7%.
But outside the main centres, it was a pretty consistent picture of rising property values in the next tier of markets.
- Palmerston North and New Plymouth only edged higher (0.1% apiece)
- Napier was up by 0.7%
- Gisborne 0.8%
- Invercargill by another 1.7%.
Indeed, Invercargill continues to outperform most other parts of the country, rising by 7.1% over the past 12 months. Wairoa and Grey Districts are the only other areas to have growth of 7% or more over that period. Invercargill also sits alongside Grey, Westland, Ashburton, Timaru, Central Otago, Southland District, and Gore as the only markets where house prices are currently at a new peak.
If you would like a full breakdown of the Home Value index in your region, or city, click HERE
The shape of the economy is telling us a lot at the moment
Given that the services sector has been sluggish lately but agriculture faring well, it’s no surprise that those rural districts in the South Island are seeing a degree of resilience in property values, yet bigger centres such as Auckland or Wellington are still subdued.
Of course, even though property values across the country in March weren’t obviously impacted by the conflict in Iran, it’s very early days and the war puts a whole new level of uncertainty into the mix, especially around diesel supply for primary production.
In other words, housing market activity and prices in most if not all parts of the country are vulnerable to this developing economic shock. The key question is ‘how long it lasts’, which at this stage nobody knows. There will certainly be an inflationary effect in the near term, but the Reserve Bank doesn’t seem inclined to react straightaway with a higher official cash rate, partly because the conflict will also tend to dampen the economy down the track.
The housing recovery could be delayed again
Thinking ahead, whether the Iran conflict does ultimately push up mortgage rates or it slows the economy (or both), the headwinds for house sales and property values seem to be building again. March’s HVI remained fairly resilient, but it’s a watching brief over the coming months.
Arguably the missing piece in the housing market lately has been a confidence factor, and now, in light of the latest conflict and sharply higher fuel prices, it’s difficult to see housing market sentiment or property values lifting sharply further in the near term. Of course, that’s great for buyers.
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!
