Rate cuts yet to boost values
In September, CoreLogic’s Home Value Index (HVI) revealed a 0.5% drop in property values, marking the seventh consecutive month of declines.
Since February, national property values have fallen by 4.7%, equating to a loss of $39,399.
Despite this, current prices remain 16% higher than pre-pandemic levels but nearly 18% below their post-COVID peak.
Major cities show mixed results
The country’s major cities displayed varied performance in September.
Auckland experienced a 0.7% drop, bringing its total decline since February to over 7%. Hamilton fell 1.2%, and Wellington was down 0.5%.
However, Christchurch remained stable, and Dunedin saw a slight 0.1% increase.
CoreLogic chief economist Kelvin Davidson (pictured above) noted the uneven performance.
“The latest data shows sluggish performance across the country. While lower mortgage rates may boost market sentiment, we haven't seen significant impacts on property values yet,” Davidson said.
Mortgage rates drop, but housing affordability remains stretched
Although declining mortgage rates are boosting market confidence, affordability challenges and elevated property listings are keeping prices subdued.
Davidson warns that despite a potential bottoming out of price declines, a significant market recovery is not imminent.
The Reserve Bank is expected to announce another cut to the OCR in early October. With falling mortgage rates continuing into 2025, borrowing capacity could expand, but Davidson cautioned that DTI restrictions could curb any major price increases next year.
Auckland and Wellington trends
In Auckland, every sub-market saw a drop in values, except Franklin. Declines ranged from 0.4% in Papakura to 0.9% in Auckland City. Over the past three months, Auckland City and Rodney experienced the steepest declines at over 4%.
Meanwhile, in Wellington, Porirua saw a 0.4% rise in values, while Wellington City dropped 0.5%. However, when looking at a three-month period, every sub-market in Wellington has seen declines of at least 2%, with Lower Hutt and Kapiti Coast nearing 4%.
Regional markets vary
Across regional markets, Gisborne, Napier, and Hastings all saw values drop by more than 1%.
On the other hand, Queenstown, Nelson, and Invercargill recorded modest gains.
Davidson attributed these differences to local factors, noting that Invercargill, with a median value of $460,000, remains an attractive market for first-home buyers due to its affordability.
Outlook: Modest growth in 2025
Davidson expects property values to stabilise in the coming months, though a sharp rebound is unlikely in late 2024.
He anticipates a seasonal increase in sales activity toward the end of the year but warns that elevated stock levels and affordability constraints will keep the market in a buyer’s favour for the time being.
“We could see some upward movement in sales and prices in 2025, but with continued economic uncertainty and job losses, a strong seller’s market is unlikely,” Davidson said.
Download the CoreLogic October HVI report here.
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