Market recovery now in its third consecutive month
The New Zealand housing market has continued to recover for the third consecutive month amid low levels of sales activity and challenging economic conditions, with modest growth in residential property values in October, according to Quotable Value (QV).
The QV House Price Index for October 2023 showed a 2.1% increase in the national average home value over the three months, reaching $907,387, following a 0.9% quarterly lift in September.
“Interest rates and credit constraints continue to act as a handbrake for the most part, but we are seeing increasing signs of life across much of the country,” said James Wilson (pictured above), QV operations manager.
Only three out of the 16 main urban centers monitored by QV reported decreases in average home values in the October quarter: Whangarei (-0.4%), Hamilton (-0.2%), and New Plymouth (-2.8%). In contrast, New Zealand’s largest cities recorded substantial gains, with Auckland showing a 2.7% increase, Wellington at 2.5%, and Christchurch at 1.8%.
“The property market’s recovery has largely been fuelled by first-home buyers in the more affordable areas, but we’re also starting to see that recovery spread into our largest urban areas now, up the property ladder and into some of the higher value brackets,” Wilson said.
He said there are emerging signs of a mindset shift, despite most people remaining cautious.
“Interest in purchasing property has been on an upward trajectory post-election and as we head towards what is typically the peak selling season, with some purchasers looking to get in ahead of any perceived property price increases,” Wilson said.
“A little bit of FOMO is setting in, with the number of new listings on the market not keeping up with demand. This is putting some upward pressure on prices.”
Wilson expected the market to maintain a “flat to gently rising” trajectory in the foreseeable future.
“I still don’t expect to see a big rebound in house prices given the strength of the economic headwinds we’re facing,” Wilson said. “But considering what we've all been through since COVID first made its way to these shores, flat is probably the best thing given the current conditions.”
He said it’ll be interesting to see increased investor activity in the coming months, especially with the recent clarity on a change in government.
“This could increase the competitive pressure on house prices in more affordable areas and places where record migration is driving rapid population growth, but it’s still unlikely we’ll see a major return of investors while high interest rates and credit constraints remain,” Wilson said.
For a regional breakdown of property values, read QV House Price Index, October 2023: Property market gets post-election confidence boost.
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