Buyer's advantage amid prolonged downturn
As New Zealand’s property values continue their significant decline since 2021, buyers find themselves in a position of increased bargaining power.
According to CoreLogic NZ’s January Housing Chart Pack, the national property values have seen a nearly 18% drop from their post-COVID peak.
This trend is more pronounced in major urban centers like Wellington and Auckland, with property values plummeting approximately 25% and 22% respectively, whereas Christchurch exhibits a relatively modest decline of 7%.
Current property market conditions
Kelvin Davidson (pictured above), chief property economist at CoreLogic NZ, noted that the ongoing subdued property values were expected due to a combination of high mortgage rates and a weakening labour market.
“December marked another slight decline of 0.2% in national property values, contributing to the ninth drop in the last ten months,” Davidson said.
Despite a mild increase in sales volumes over the past 18 months, the New Zealand property market hasn’t seen a significant reduction in available listings, which remain about 25% higher than the five-year average.
This surplus in listings, particularly noted in Auckland and Wellington, has maintained soft price conditions, benefiting buyers but posing challenges for recent homeowners, especially those who purchased at peak prices.
Lending trends and future outlook
The lending sector showed a move towards shorter-term loans, with a notable shift from borrowers towards floating rates or fixed terms of six to 12 months.
Looking ahead, Davidson anticipates mixed influences on the market.
“Lower mortgage rates are expected to stimulate sales volumes and property values, yet the potential introduction of debt-to-income ratio caps could pose new challenges for borrowers in the upcoming year,” he said.
Key insights from CoreLogic’s January Housing Chart Pack:
- The combined value of New Zealand’s residential real estate market stands at $1.62 trillion.
- Property values nationally have slightly decreased by 0.2% in December, with a quarterly fall of 0.3% and an annual dip of 3.9%, returning to a 17-month low.
- Total listings in December reached 25,139, marking a 25% increase over the five-year average.
- Rental market growth has stalled, with gross rental yields rising to 3.9%, the highest since early 2016.
- Approximately 66% of New Zealand’s existing mortgages are fixed but are due to reprice within the next year.
- Inflation has re-entered the 1–3% target range, with anticipation of an OCR cut in February.
For more detailed insights and to stay updated on monthly trends, download and subscribe to the CoreLogic Housing Chart Pack.
