Here’s where house prices have gone up annually

Thursday, 4 April 2024

New Zealand's housing market had a soft start to the year, but some areas have seen their annual price growth rates turn positive, new CoreLogic figures show.

The average national house price rose 0.5% to $934,806 in March, according to the property research company’s latest House Price Index.

It followed muted gains of 0.4% and 0.3% in January and February respectively, and meant prices increased just 1.1% over the first quarter of this year.

The national average was now 3.2%, or $29,361, up from its September trough, but it remained 10.4%, or $109,455 below the March 2022 market peak.

CoreLogic chief property economist Kelvin Davidson said the run of three softer results in a row at the national level was not surprising given stretched housing affordability and high mortgage rates.

The market could be described as “not too hot, not too cold”, but that was not unusual and had been seen in past cycles where prices ticked along for a few years without significant increases, he said.

“After the global financial crisis, it took a couple of years for the market to get going again. No recession is the same, but this has happened before.”

Another feature of the market was the inconsistent, “patchy” nature of the upturn, which was evident in the latest figures, he said.

On a monthly basis, prices in Wellington, Auckland, Christchurch and Dunedin rose by 0.9%, 0.4%, 0.6%, and 0.5% in March to averages of $923,033, $1.29 million, $762,456 and $640,388 respectively.

But prices in both Tauranga and Hamilton were down 0.2% to $1.03m and $807,251 in March, and price performance in sub-markets across the Wellington and Auckland regions was variable.

Outside the main centres, monthly price performance was also mixed, with Invercargill, New Plymouth, Napier, and Rotorua all up by at least 1%, but Gisborne and Queenstown both down 1.2%.

Despite the variability, annual price growth rates turned positive in a number of markets, the figures showed.

Queenstown and Invercargill had the biggest annual increases with 4.5% and 4.4%, followed by Christchurch with 3.6%.

In Hastings and Dunedin the average price was up 3.1% and 2.9% on the same time last year, while Wellington’s regional average was up 2%.

Davidson said there was always local variation in price trends, even when the national market was booming.

It was not a surprise some regions were rising more strongly than others in the current “testing” market, while others were still weak, or actually falling, he said.

“The general trend should remain upwards in the coming months, but it's unlikely to be a straight line everywhere, and the data is a reminder this upturn may well be inconsistent from month to month, and across regions.”

More listings were coming on to the market, which gave buyers more choice, and sales volumes were now trending higher - although from a very low base, he said.

“There were 64,000 to 65,000 sales last year, and we expect them to rise to about 72,000 this year, and maybe to around 80,000 next year.

“But the long-term average is 90,000 to 95,000, so activity remains well below ‘normal’, and is likely to for a couple of years. In that environment, it follows that price patterns are a bit patchy.”

High mortgage rates remained the biggest challenge for the market, and while they might have peaked they were unlikely to get much lower any time soon, he said.

“If the Reserve Bank’s current projections prove to be correct, the official cash rate may not start to fall until next year, highlighting that shorter-term fixed mortgage rates may not drop much for at least another six to nine months.

“Changes to tax policy will help investors tax flow, but will not be enough to trump high rates and send them rushing back to the market in huge numbers.”

Davidson said it all suggested the upturn would remain subdued, and there was a good chance monthly price growth rates would be around 0.4% to 0.5% for most of this year.

That would make for annualised growth around the 5% mark, which was consistent with still-stretched affordability, high mortgage rates, and reasonable levels of listings/buyer choice, he said.

“But it’s not a bad thing for the market. We need a period where prices are more stable, and incomes can catch up. It’s good for affordability, and good for financial stability.”