House prices drop, uneven recovery across regions
New Zealand house prices have significantly fallen from their 2021 highs, but certain areas are now considered more "undervalued" compared to long-term trends, according to CoreLogic data.
While Auckland and Wellington have returned to their historical price-to-income ratios due to declining values, regions like Wairoa, Kaipara, the Far North, and KaikÅura are now more affordable than their historical averages.
In contrast, Mackenzie, Whanganui, Kawerau, and Invercargill remain above their long-term affordability trends, with Mackenzie nearly 40% higher.
Tourist destinations hold value
CoreLogic head of research Nick Goodall (pictured above) attributes Mackenzie’s high values to its appeal as a tourist destination.
“During the COVID boom, Mackenzie saw strong growth and hasn’t experienced much of a decline since,” Goodall told RNZ.
He said that homeowners in holiday destinations like Mackenzie are less likely to sell during a market downturn, choosing instead to hold onto properties.
“Transactions might slow down, but values don’t necessarily drop because sellers are unwilling to lose money outright,” Goodall said.
Affordable areas emerge
Regions like Kaipara have seen significant price adjustments, making them more affordable.
Kaipara’s median house price fell 22% from its $1 million peak to $758,000, creating opportunities for buyers.
Goodall noted that higher local incomes, partly due to remote work and Auckland commuters, may also be supporting affordability in the area.
Investor trends and yield growth
CoreLogic data showed that gross rental yields have steadily increased as property values softened and rents rose, RNZ reported.
Nationally, yields have risen from 2.7% in late 2021 to 3.9% now, the highest since 2015. Cities like Hamilton, Tauranga, and Christchurch offer yields around 4%, while Dunedin leads at 4.4%.
Opportunities for buyers
Property experts point to value in Auckland, Wellington, and Christchurch.
Ed McKnight of Opes Partners highlighted Auckland and Christchurch as particularly promising, though he expressed caution about Wellington due to economic challenges.
Smaller centers like Whangarei and Whanganui are also attracting investor interest.
“Auckland hasn’t had a boom in a while and is probably due for it,” property investment coach Steve Goodey told RNZ, emphasising its potential to lead the next recovery.
With rental yields climbing and affordability improving in some regions, the current market offers a mix of opportunities for buyers and investors alike.
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