CoreLogic’s House Price Index rose 0.5 per cent, taking values 1.1 per cent higher over the first quarter of this year.

The average property value now stands at $934,806, up 3.2 per cent ($29,361) from September’s trough, but still 10.4 per cent (-$108,455) below the recent peak.

The inconsistent nature of the upturn was evident, with Wellington rising strongly (0.9 per cent), and Christchurch, Dunedin and Auckland also showing gains (0.4-0.6 per cent), but Tauranga and Hamilton edging down 0.2 per cent.

“NZ’s housing market can probably be described as ‘not too hot, not too cold’,” says Kelvin Davidson, CoreLogic’s chief property economist.

“High mortgage rates remain a big challenge for all borrowers’ minds, whether they’re taking out a new loan or repricing an existing mortgage. While the new tax year and 80 per cent mortgage interest deductions will help cashflow for property investors, it’s unlikely to be enough to trump high interest rates.”

In addition, Davidson says, while the first official cash rate cut in the next cycle is getting closer, it’s not here yet.

Mortgage rates

If the Reserve Bank’s projections prove correct, the cash rate may not start to fall until next year, highlighting that shorter-term fixed mortgage rates may not drop much for at least another six to nine months.

There has also been a turnaround in listings activity in the first few months of this year, with a good flow of fresh properties hitting the market, raising the choice for buyers and taking a bit of heat out of property prices.

The general sense is that the so-called sellers’ market of late 2023 has now switched back in favour of credit-approved buyers, Davidson says.

Market performance was variable across Auckland in March, with Rodney and North Shore up by about two per cent, but then a large gap back to broad stability in Auckland City, Waitakere and Franklin, while values in Papakura and Manukau declined over the month.

There’s also been inconsistent growth over the March quarter, with Rodney up more than two per cent, but areas such as Waitakere only up slightly (0.2 per cent) and Papakura fractionally lower (-0.1 per cent).

“Auckland’s market is often seen as a bellwether for national trends, and although I’m a little sceptical of the degree to which patterns in our largest city genuinely ‘filter out’ to the regions, there’s no doubt Auckland is demonstrating what’s being seen elsewhere – an ‘up and down’ recovery,” Davidson says.

Digging beneath the surface in Wellington, there’s also clear evidence of variable performance. Upper Hutt, for example, spiked 2.3 per cent in March, with Kapiti Coast and Wellington City also posting solid growth. However, Lower Hutt and Porirua saw values slide.

“It’s interesting to note the falls from the peak remain pretty large in Wellington, even after recent growth. Take Lower and Upper Hutt as examples, where values are still down from the peak by about 20 per cent in both areas. That decline probably isn’t doing much for the mood of homeowners who bought at the tail-end of the boom, but on the flip side it may present a good opportunity for prospective new buyers,” he says.

Regional index

Outside the main centres, the March data was also a mixed bag, with Invercargill, New Plymouth, Napier and Rotorua all rising by at least one per cent, but Gisborne and Queenstown dropping 1.2 per cent apiece.

Given the broad (albeit slow) upturn has now been in progress for about six months, several regional markets have seen their annual house price growth rates turn positive. Hastings, Invercargill and Queenstown have had annual gains of about three per cent or more. However, Gisborne, Whangarei and Nelson are still about two per cent (or more) below the levels from a year ago.

Davidson says there’s always local variation in house price trends, even when the wider market nationally is booming.

“It’s no surprise that some regions are rising more strongly than others in this ‘testing’ market, while some are still actually falling. The general trend should remain upwards in the coming months, but it’s unlikely to be a straight line everywhere.”

The outlook

He says last month’s subdued property value data is a timely reminder that this upturn may well be inconsistent from month to month, and across regions.

“Although house sales volumes are now trending higher, they’re coming off a low base, and activity remains well below normal. In that environment, it’s no surprise that value patterns are also a bit patchy.

“First home buyers continue to target the market and have been a great success story in the past 12 to18 months, using KiwiSaver for at least part of the deposit, and making full use of the low deposit lending allowances at the banks. But other buyer groups, such as mortgaged investors, remain more subdued.

“Sales volumes remain on track to rise by about 10 per cent this calendar year and property values by perhaps five per cent nationally – decent figures, but slow by past standards,” he says.