CoreLogic House Price Index shows third consecutive monthly rise
The New Zealand property market concluded 2023 on a robust note, with the CoreLogic House Price Index revealing a third consecutive increase in average property values in December.
Following the 0.4% rise in October and the 0.7% gain in November, December witnessed a notable 1% surge in property values. This marks the most substantial monthly gain since January 2022, reaching an average value of $924,489, reflecting a 2.1% increase over the past three months.
Surge in property values
While national property values remained 3.3% below the previous year’s levels and 11.4% lower than the peak two years ago, the gains in December were widespread across major centers. Tauranga, Auckland, and Christchurch all registered increases exceeding 1%.
Kelvin Davidson (pictured above), chief property economist at CoreLogic NZ, noted that while the December gains were expected, there could be continued “patchiness” in 2024, in terms of variability in both monthly changes and regional markets.
“A further rise in property values in December seemed almost inevitable given housing market sentiment has risen in recent months,” Davidson said in a media release. “This is off the back of several factors including the change of government, a peak – and even some falls – in mortgage rates, continued growth in employment, and soaring net migration.”
Despite the upward trend in property prices, affordability pressures persist, and the potential introduction of debt-to-income ratio caps within the next year may impact the market, he said.
“As such, although the general upwards trend for property prices is likely to continue in 2024, it may not be smooth from month-to-month, with some results stronger, but others much weaker,” Davidson said.
Regional variability
“Underlying that patchy national picture would be variability at the regional level too, with the main centres potentially seeing the biggest boost from inwards migration, but provincial markets less supported,” Davidson said.
In Auckland, Manukau led with a notable 2.1% increase in property values in December. However, preceding modest declines resulted in a quarterly increase of “only” 1.6%. North Shore, Waitakere, and Auckland City also demonstrated resilience, while Rodney and Papakura remained relatively stable. Franklin experienced a decline of 0.9% in December and 0.8% over the past three months.
Wellington’s sub-markets, meanwhile, continued to grow in December, particularly in Lower Hutt, achieving a substantial gain of 2.6%. Since September, Lower Hutt has seen a significant increase of 4.5%, with Porirua leading with a quarterly growth of 4.9%, resulting in an annual change of 1.1%.
Property market outlook
Davidson expects a variable property market in 2024, with some months experiencing stronger results than others. The provincial value results for December indicated diverse outcomes, with Gisborne experiencing a monthly fall, while Whanganui, Rotorua, and Queenstown saw rises of 2% or more.
Looking ahead, the CoreLogic economist suggested that the likely recovery in 2024 may not meet all expectations, citing the impact of mortgage rate movements and potential lending restrictions by the Reserve Bank. He anticipated a reasonable growth of about 10% in sales activity and a national property value increase of approximately 5% in 2024.
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