The suburbs where house prices are defying the downturn

Thursday, 12 September 2024

House prices fell in nearly three quarters of the country’s suburbs over the past three months, further evidence the market is going through a weak patch, a property researcher says.

CoreLogic has released its latest suburb price mapping figures, and they show prices dropped in 674 suburbs, or 71% of the 954 suburbs analysed over the past three months.

They were down by at least 2% in 175 suburbs, and by over 4% in 12 suburbs.

East Tamaki in Auckland had the biggest quarterly decline, with a 6.9% fall to $1.04 million in the last analysis. Its prices were down 7.5% from $1.13m at the same time last year.

Northpark and Somerville in Auckland had price falls of 6.9% and 6.3%, which left their median prices at $1.38m and $1.43m respectively.

Meremere in Waikato, Paekākāriki in Kāpiti Coast and Kingston in Wellington rounded out the bottom six with price drops of 5.7%, 4.7% and 4.6% respectively, to $530,700, $921,250 and $833,750.

CoreLogic chief property economist Kelvin Davidson said over the past year it had been a mixed picture for the market.

The first six months of the year saw a slightly recovering market, but over recent months there had been a shift in momentum, he said.

“Rising affordability pressures, increased listings, and growing job insecurity have led to a more cautious buyer environment, have resulted in a declining market, and that decline is widespread.

“While the impact is most evident in the larger urban centres, prices have fallen in suburbs all around the country, and across different value bands.”

Auckland looked like it was one of the weaker markets, and affordability issues and a big influx of new listings, including lots of new builds, were weighing on prices in the region, he said.

Of 200 Auckland suburbs, 183 suburbs saw price declines over the last three months.

Some suburbs around the country defied the downturn to record price gains, with 27 suburbs recording increases of at least 2%, and in three of them prices were up 5% or more.

Kew in Invercargill and Otautau in Southland had the biggest increases with 6.9% and 6.3%, which left their median prices at $371,450 and $370,700.

But only 85 suburbs had increases of over 1%, compared to 253 in the last analysis in June.

Davidson said the best performing suburbs were generally at the more affordable end of the spectrum, and nine of the top 10 had a median price of less than $500,000.

The outlier was Arthurs Point in Queenstown, which had a median of $1.54m.

“The wider Queenstown market is a sought-after lifestyle area, and holds broad appeal among tourists, second homeowners and owner occupiers which has made it more resilient despite the broader affordability pressures.”

There was unlikely to be a swift rebound in prices, and he expected further softening over the coming months, he said.

“While lower mortgage rates will ease pressure on some buyers, affordability remains a major hurdle, and job insecurity is starting to hold back demand.

“Stock levels are at multi-year highs, giving buyers more leverage, but access to finance remains tricky, limiting how many can take advantage of the current conditions.”

The market would remain subdued into 2025, although the tailwinds of lower interest rates might prevent a sharp decline in prices, he said.

“But we are unlikely to see strong price growth in the near term, as there are still headwinds out there, so the market is likely to just tick along.

“Following the global financial crisis, we saw a similar bouncy pattern of price movements up and down. It took about five years to get back to a sustained upward trend.

“The market is now three years on from its peak in 2021, so it's plausible that we could see another 12 to 18 months of a soft market.”

Herne Bay remained both Auckland and the country’s most expensive suburb with a median price of $3.38m, while Seatoun was Wellington’s priciest at $1.76m and Scarborough was Christchurch’s at $1.84m.