Report shows signs of Property Value Decline Easing in Aotearoa NZ, Boosting Homeowner Optimism
In May, CoreLogic released a report indicating a further 0.7% decline in property values across Aotearoa NZ. However, there are encouraging signs that the ongoing downturn may be approaching its end, as the annual rate of change shows signs of easing.
On a national scale, although values have decreased over the past 12 months, they still remain $194,000 higher than the pre-COVID level observed in March 2020. The annual rate of change has slightly improved from -10.3% in April, providing tentative evidence of a decelerating decline.
Nick Goodall, the Head of Research at CoreLogic NZ, highlights several positive indicators for homeowners. These include a moderation in house price declines and recent forecasts by the Reserve Bank of New Zealand (RBNZ), suggesting that the Official Cash Rate has likely reached its peak. These factors contribute to a more optimistic outlook for homeowners.
"While the OCR currently stands at a relatively high level of 5.5%, following a total increase of 525 basis points over the last 20 months, this projected upper limit for interest rates reinforces our belief that a possible floor in prices is on the horizon," he stated.
"This has been an exceptionally rapid and impactful tightening cycle in monetary policy, and the RBNZ has effectively signaled a pause, urging everyone to observe how this unfolds, as mortgage holders continue adjusting to increased mortgage payments, consequently reducing spending elsewhere in the economy."
Nick Goodall also mentioned that a temporary increase in the cash rate could provide reassurance to many New Zealand property owners who are preparing for the upcoming wave of refinancing. These borrowers will soon reach the end of their current interest terms within the next year.
"Mortgage holders and aspiring homeowners should now be able to assess the worst-case scenario for their mortgage repayments, allowing both them and their bank to confidently evaluate serviceability test rates," he explained.