1. The first signs of an upturn?
The Cotality Home Value Index for February showed a 0.2% increase in the nationwide median property value, to $806,697. Clearly, not a big rise, but the largest we’ve seen in four months and more than reversing January’s slight drop.
What struck me most was the broad-based nature of the February increases. Auckland’s value increase of 0.1% was the smallest out of the major metros; Wellington, Tauranga and Christchurch all enjoyed middling rises of around 0.5%; and property values in Hamilton and Dunedin jumped by 0.9%. Many of the key provincial towns and cities were up too – in fact, the median property value climbed to new peaks in Ashburton, Timaru, Gore, Southland District and Invercargill.
Now, make no mistake, it’s early days, and this is not a trend yet. Buyers and sellers remain cautious, and I wouldn’t anticipate a strong return to growth in national median values in the near term. But upturns have to start somewhere, and higher sales volumes, low-ish mortgage rates and a recovering economy all point to rising house prices at some stage in 2026.
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The labour market probably holds the key, and most forecasts suggest that employment has already troughed, with the unemployment rate set to fall.
2. Employment growth is slowly emerging
Speaking of which, Stats NZ’s figures last week showed that the number of filled jobs edged up by 0.2% in January, albeit after a (downwardly revised) 0.3% fall in December. Looking more broadly, however, there seems to be a gradual (albeit inconsistent) upward trend emerging for filled jobs, which is good news and backs up the forecasts I mentioned above.
Cotality chief economist Kelvin Davidson: "Upturns have to start somewhere." Photo / Peter Meecham
3. Dwelling consents are still rising too
It was also encouraging to see another increase in the number of new dwellings consented in January – up by 15% from the same month last year. This was the seventh rise in the past eight months and takes the annual running total up to just short of 37,000. This bodes well for the delivery of new houses over the next 12-18 months and should support affordability.
4. Continuing to fix longer?
My main focus this week in terms of fresh data will be the Reserve Bank’s lending figures, which will show how many borrowers floated in January versus those who fixed longer. After a flurry of floating activity in November, almost half of lending in December was on a fixed rate of at least one year, with the two and three-year rates pretty popular. This makes sense in the current environment where mortgage rates might tend to shift higher over the medium term (albeit not immediately). January’s lending figures will probably show more of the same.
5. Another small lift for net migration?
Also of interest will Stats NZ’s net migration figures for January. There have been slowly emerging signs lately that the migration cycle is turning, with fewer people leaving and more arriving. This goes hand in hand with a stronger economy and the expectation that job prospects in NZ are improving. To be fair, it’s nothing major yet and the migration numbers are prone to downward revisions. Even so, they do still seem likely to trend higher over the next year or two, and a positive result for January could be another small step along that path.
- Kelvin Davidson is chief economist at property insights firm Cotality
