House Prices Rise for First Time Since March 2022
Ding, dong, the market downturn is dead according to the latest CoreLogic's national House Price Index (HPI).
The leading New Zealand housing price index posted the first rise in property values since March 2022, up 0.4% in October and 0.1% higher over the past three months.
These figures confirm the end of the recent housing market downturn, with a total peak to trough decline of 13.2% (or roughly -$138,000). However, at just short of $909,000 in October, average values are still almost 25% above the ‘pre-COVID’ levels of March 2020.
CoreLogic NZ Chief Property Economist, Kelvin Davidson said that around the main centres, signs of the emerging upturn were pretty widespread in October.
Values in Hamilton and Christchurch rose by more than 1%, Dunedin by 0.8%, and Wellington and Auckland also recorded increases over the month.
Kelvin added, “The key fundamentals for house prices have been looking stronger for a reasonable period of time now. October’s data has brought that first increase at the national level, but it’s early days and there's still a lot of diversity in market conditions across the country.
Although the new government hasn’t been formalised yet , Kelvin noted that the shift in voting towards the centre-right has evidently boosted confidence in the housing market. This optimism persists, even as mortgage rates have recently inched higher. “We’ve also seen net migration rise to a new record high, which is boosting property demand,” he added.
Another pivotal factor contributing to the housing market's resurgence is the enduring strength of the labour market. “While this week’s official data for quarter three may show a rise in the unemployment rate, it will be due almost entirely to a larger labour force, not job cuts.
The resilience of employment has meant the vast majority of households have successfully managed to rejig their finances as they reprice from older, lower fixed rates, onto today's higher levels,” Kelvin Davidson added.
“The loosening in the Credit Contracts and Consumer Finance Act (CCCFA) rules from May and slightly relaxed LVR settings from June have both also played a role, while at the same time, the flow of new listings remains low. As a result, there’s been a re-emergence of some degree of competitive price pressures, as buyers attempt to secure a property in a market where there’s a bit less choice.”
Commenting on the recent developments, Keith Niederer, General Manager, NZ, Raine & Horne, notes, "It's encouraging to witness the more signs of recovery in our housing market. Although the overall rise is modest for now, it reflects a positive shift in market sentiment and economic conditions.
"The bottom line is that rising property values will be a prominent feature leading up to Christmas and into the New Year. This is excellent news for property owners contemplating a sale."