Housing market momentum has ‘evaporated’

Tuesday, 14 May 2024

The average national house price was $926,772 in April.

Increases in house prices have stalled around most of the country as tougher economic times continue to bite, Quotable Value (QV) says.

The property valuation company has released its latest House Price Index, which shows that prices, on average across the country, rose by just 0.1% in the three months to the end of April.

That was down from 2.2% in the three months to March, and left the national average at $926,772.

Only three of the 16 centres monitored recorded price increases of above 2% in the quarter. Rotorua was up 3.6% to an average of $683,415, while Invercargill and Dunedin were up 3.2% and 2.1% to $481,973 and $646,668 respectively.

In the Wellington region, prices were up 0.6% to an average of $873,614, while in Christchurch they were up 0.2% to $766,312.

But prices in Auckland region were down for the third month in a row, with a drop of 0.7% to an average of $1.28 million.

Napier, Hastings and Palmerston North also recorded price falls, and prices were flat in Hamilton.

Quotable Value’s House Price Index for April 2024.

QV operations manager James Wilson said what little momentum the market had going into autumn had all but evaporated now.

Price growth had largely stalled across much of the country, reflecting difficult economic conditions that were not getting any easier and were not likely to any time soon, he said.

“The economy is doing it tough right now. High interest rates continue to bite, inflation remains stubbornly high, and the unemployment rate is rising.

“Business confidence is low and cost of living pressures remain a significant challenge for many households.”

At the same time, a surplus of real estate listings was helping to maintain downward pressure on prices, he said.

“While several areas have bucked the prevailing trend, it remains to be seen whether this growth will continue as what is traditionally the peak selling season for real estate starts to wind down for winter.”

Wilson said sales were relatively low and likely to drop even lower as winter set in, and that meant what little growth there was would continue to be patchy and variable.

There is not likely to be much house price growth over the coming months, Quotable Value’s James Wilson says.

The overall trend appeared to be a market that was in a sort of stasis until conditions improved, which almost certainly would not be until after winter, he said.

“Given the circumstances, a flat market is to be expected. It will provide a stable foundation to step up off when interest rate pressure finally begins to ease. But that is not likely until late this year, if at all in 2024.”

Getting finance and being able to service a mortgage was not easy, but it was buyers who controlled the narrative in most areas, as they had time on their side and plenty of options to choose from, Wilson said.

But large numbers of investors had not re-entered the market following the announcement of more investor-friendly tax policies, he said.

“And the looming introduction of debt-to-income restrictions will hamper investors’ ability to purchase existing property when it eventually happens, so it seems like we could be in for another quiet winter.”