"It's no surprise" the market has lost momentum, expert says
New Zealand’s home value growth has seen a decline in the past two months, a report by CoreLogic found.
In its latest House Price Index report, CoreLogic found that the average property value across New Zealand was priced at $931,438, which was a 1% increase from the figures seen in the previous year. However, it was still 11% below the peak.
“In the past few weeks we've seen a raft of regulatory changes, including the abrupt scrapping of first home grants, the near-term easing of the LVR rules and the introduction of debt-to-income caps,” said Kelvin Davidson, CoreLogic NZ’s chief property economist.
“But with mortgage rates tipped to remain high for a while yet, it's no surprise the market has lost a bit of the momentum we had been seeing through the early part of this year. Forthcoming tax relief for households is unlikely to change that.”
Auckland led pack when it came to the recent slowdown in property values across New Zealand. Waitakere was the sole sub-market that managed to avoid decreases in May as other markets saw various declines from 0.4% to more than 1%.
Wellington’s property market slid back again in May as Kapiti Coast was the sole area that saw a gain of 1.8%. Porirua saw a 0.2% decrease while Upper Hutt and Wellington City saw a 1% decline.
“Values across Wellington's wider housing market remain 15-20% below their peak, but this doesn't mean affordability has magically been restored to normal,” Davidson said.
“With property values still quite high and mortgage rates elevated too, buyers are still facing challenges. That seems to be showing up in the variability of values from month-to-month, and within the various sub-markets.”
Davidson said that the property market for the rest of 2024 may continue to be subdued when it came to sales volumes and property values. He noted affordability is still stretched and the decline in mortgage rates may only be felt in the upcoming year.
“The removal of first home grants is unlikely to have a lasting or significant impact on new buyer demand, and the caps on debt-to-income ratios won't bite straight away either,” said Davidson.
“But even so, our expectation that 2024 will only really see the housing market ticking along remains firmly on track, with activity and prices set to remain variable from month-to-month and across regions.”
