1. The upturn is more tortoise than hare
The new Cotality Home Value Index, formerly the CoreLogic index, recorded a 0.3% national increase in property values in April, the fourth reasonably modest gain in a row. In other words, the upturn is here, but the momentum is only building slowly.
April was a stronger month for most of the main centres, with Hamilton up by 0.8%, Christchurch by 0.5%, and Auckland rising 0.3%. Apartments and townhouses have risen by 0.9% nationally since January, while standalone houses were up by 1%, and lifestyle properties by 0.2%.
Of course, regular readers should not be surprised by the slow nature of this “upturn”. As I’ve been noting for a while now, lower mortgage rates are clearly a strong support for property values, but there are restraints too, such as the soft economic backdrop and the abundance of listings, which gives buyers plenty of power when it comes to price negotiations.
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All in all, recent patterns suggest we’re still on track for a subdued rise of around 5% in values in 2025. Some people may well be disappointed with such an outlook, but it’s always worth noting there are two sides to the housing market coin. Aspiring first-home buyers – or investors – who are progressing towards saving a deposit will no doubt be pleased with a flat patch.
2. Borrowers continue to shop around
The Reserve Bank’s latest figures showed $8.5 billion of new lending was completed in March, across house purchases, loan top-ups, and bank switches – and perhaps the most interesting part was those switches. About 3100 borrowers shifted banks in March, with a value of $2.1b (both numbers are record highs). Clearly, people are shopping around, and the short-term nature of a lot of existing loans (i.e. on floating rates or six-month fixes) gives greater ability to switch banks at low or zero break fees/costs. Cashbacks might also be enticing some switching activity, as well as greater awareness of the options people have due to increased adviser presence.
CoreLogic chief economist Kelvin Davidson: "Aspiring first-home buyers will no doubt be pleased with a flat patch." Photo / Peter Meecham
3. No real clarity of tariff effects so far
April’s ANZ business confidence figures showed that overall sentiment was down, but firms’ feelings about their own businesses weren’t too bad. Meanwhile, inflation expectations remain stable, but there is evidence of upwards pressure on input costs for businesses. All in all, a mixed bag here, and one we’ll just have to watch closely over the next few months as the tariff uncertainty plays out.
4. Financial Stability Review likely to come and go pretty quickly
Just a quick one regarding the FSR on Wednesday. It can sometimes be of huge interest if the Reserve Bank makes a policy change to lending rules, such as the debt to income ratios. But it seems unlikely this version will feature anything like that, so it’s likely to pass without much fanfare.
5. The last rise in the unemployment rate?
The main data release to watch this week is Stats NZ’s Q1 labour market figures. The unemployment rate seems likely to have risen from 5.1% to perhaps 5.3%, but it might be due more to a larger labour force than job losses. Indeed, monthly filled jobs figures have recently contained hints that hiring activity might have just started to unfreeze again. Overall, the Q1 figures might mark the trough for the labour market.
- Kelvin Davidson is chief economist at property insights firm CoreLogic
