OneRoof figures show property values are rising in nine out of 10 suburbs, but the sharp slowdown in sales activity at the end of last year resulted in a muted start to 2024 for the New Zealand housing market.
Property values were up quarter-on-quarter in 90% of suburbs nationwide, with the biggest quarterly lifts in Arrowtown (+8.3%), Mataura (+8.2%) and Whitford (+8%).
Suburbs in Queenstown-Lakes enjoyed the strongest growth, although lower priced suburbs in Southland, West Coast and Canterbury also benefited from first-home buyer activity towards the end of the year.
Of the 793 suburbs with 20-plus settled sales in the last 12 months, more than 40% saw year-on-year value lifts, reflecting the turnaround in the market (in July, just 7% of 878 suburbs with 20-plus settled sales in the previous 12 months recorded year-on-year growth).
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However, a soft end to 2023 did cast a cloud over the recovery of some high-profile, wealthy suburbs. Property values in Remuera fell 4.1% over the quarter and dropped 2.6% in Omaha over the same period, as buyers put on hold purchase plans.
House price growth nationwide was slow in January, consistent with the usual lull over the holiday period, which is typically real estate’s quietest period.
New Zealand’s average property value grew just 0.9% ($9000) in the three months to the end of November to $973,000, as buyers retreated from the market after a busy November and October.
The biggest quarterly rise was in West Coast, up 4.7% quarter-on-quarter to $424,000. Also performing strongly were Southland and Otago, up 3.7% and 3.2% respectively.
Property values in all three have returned to their post-Covid peaks, although the downturn in all three was shallower than the rest of the country.
Also close to recouping its losses is Canterbury. The region’s average property value was up 3.3% year-on-year and is just 2.2% ($17,000) shy of the $798,000 peak it hit in June 2022, although value growth in the last quarter has slowed.
Sliding backwards over the quarter, although only marginally, were Waikato and Gisborne, both down 0.3%.
The figures highlight the abrupt halt in Auckland’s housing market over the holiday period, with the region’s average property value up just 0.1% to $1.324m. At a district level, quarterly growth in the city was down across the board compared to levels recorded in the three months to the end of November, although a greater share of stock at first-home buyer price points managed to support growth in Franklin and Manukau.
Queenstown-Lakes is the country's leading major metro, with value growth of 4% quarter-on-quarter and 6.3% year-on-year. The heat in Christchurch isn’t quite as strong as it was in the lead-up to October’s general election, but values in the city are up 4.8% year-on-year.
While the heat Christchurch wasn’t quite as strong as it was in the lead-up to October’s general election, property values in the city are up 4.8% year-on-year to $783,000. Also showing signs of summer fatigue were Tauranga (+1.5% to $1.093m), Wellington (+1.4% to $1.014m) and Hamilton (+0.2% to $818,000).
Stock levels remain at historically low levels, but new listings in Auckland are on the rise again and agent feedback suggests February and March will be big listing months.
Valocity global CEO of real estate Helen O'Sullivan said sales volumes in December were lower than had been anticipated, given the lift in October and November, although they were up year-on-year.
Valocity data showed mortgages registered to first-home buyers in the last quarter of the year dipped to 44% from the five-year high of 45% the previous quarter. Mortgages registered to investors increased slightly to from 22.4% to 23.6% over the same period.
O’Sullivan said the Reserve Bank’s announcement around debt to income ratios was unlikely to have impact on the current market but DTIs combined with LVRs will limit house price growth in the next upswing.
“The proposed settings are not expected to make a significant difference to prices or activity levels in the current high interest rate environment,” she said.
Valocity global CEO of real estate Helen O'Sullivan says debt to income ratios may not have an immediate effect on the market. Photo / Fiona Goodall
“When interest rates are lower, DTIs will limit the level of debt borrowers can assume despite being able to service the debt and perhaps meet LVR tests. The intended effect of this will be to keep a lid on the upwards momentum that lower interest rates might otherwise drive.”
O’Sullivan added: “How far in the future lower interest rates might be opened up for speculation this week with the release of the December quarter’s CPI figure of 4.7%. This is well down on the previous quarter’s figure of 5.6% and significantly below the mid-2022 peak of 7.6%. While remaining well above the Reserve Bank’s 0-2% target range, the combined effect of this and lower wholesale interest rates sets up an interesting dynamic for the Reserve Bank to ponder.”
* Property value data derived from the OneRoof-Valocity House Value Index, taken on January 20, 2024. Only suburbs with 20-plus settled sales in the last 12 months covered. Listings data from OneRoof.co.nz, taken on January 20, 2023. New listings cover the 30 days to the same date.
