The net result is that average property values are now up 1.1 per cent over the past three months, and the annual change now sits at -4.5 per cent, the softest annual decline since November last year, when it was -2.9 per cent.

From the peak to September trough, values fell 13.2 per cent. After the increases in October and November, values remain 12.3 per cent down from the high, at $915,448.

CoreLogic chief property economist Kelvin Davidson says around the main centres signs of the emerging upturn were widespread in November.

Auckland, Hamilton, Tauranga, Wellington and Christchurch had monthly rises in the range of 0.7-0.9 per cent, while Dunedin rose by a buoyant 1.9 per cent.

“It’s no real surprise to see the second monthly rise in house prices for this emerging cycle, given that mortgage rates have shown clearer signs of peaking in recent weeks,” he says. “Despite some elevated volatility in global financial markets, the labour market is still relatively robust, and net migration inflows remain high.”

However, the market hasn’t exactly soared away just yet. While sales volumes have been growing steadily in percentage terms, it’s from a low base that hasn’t translated into a surge in the number of deals.

With the flow of new listings ticking along, there is perhaps a slight lift in properties on the market in recent weeks. “That may take a little heat out of prices as buyers benefit from more choice and vendors contend with a subtle rise in competition,” Davidson says.

Meanwhile, credit conditions remain challenging. “Even if mortgage rates don’t rise much further, or even dip a bit for the longer-term fixed rates, they’re still high, and serviceability testing remains a significant hurdle too.

“Loan-to-value ratio rules are quite a restraint on low-deposit lending, although first home buyers are certainly taking advantage of that speed limit where they can.”

the now-formalised new government may also bring a little more confidence to the economy and housing market, but he expects it will be a while until the country has a truly detailed housing policy framework.

“Any changes to the bright-line test or rules relating to mortgage interest deductibility won't happen overnight either. In any case, the restraint of high mortgage rates isn’t about to alter dramatically,” he says.

Auckland

The growth in property values in Auckland over November was fairly consistent across the sub-markets, with the North Shore up by a robust 1.8 per cent, but Rodney, Auckland City and Waitakere in a more measured range of 0.7-0.8 per cent. Franklin was a little softer, while Manukau and Papakura saw values drop in November.

“This month’s results serve as a further reminder this upturn may not be all one-way traffic. The patchiness in property values by sub-region, even though wider market averages have started to turn around, could well remain a feature in the coming months, in Auckland and elsewhere,” Davidson says. “Housing affordability is still stretched in many parts of New Zealand, and ‘higher for longer’ mortgage rates won’t do anything to ease that pressure.”

Wellington

Wellington is another key part of the country where property values dropped significantly during the downturn, but have also started to turn around relatively promptly.

“Lower Hutt and Porirua, for example, both had average values rise by 1.5 per cent in November, with the latter’s figure now up by almost five per cent in the past three months. That momentum may not be maintained, but for now Porirua is certainly showing some steady gains.”

Regional index

Diversity in market conditions exists outside the main centres, with Queenstown (3.2 per cent) and Gisborne (1.9 per cent) posting strong gains in November. Whangarei (-0.9 per cent) and Rotorua (-0.6 per cent) lagged behind, while Nelson and Invercargill were flat.

Davidson says this illustrates the variability evident from region to region which might stay in play in the coming months.

The outlook

While it seems likely property values will continue to rise in coming months, increases may not be seen in every month or location.

“This ‘recovery’ could remain fairly subdued by past standards, given that housing affordability is still problematic, mortgage rates in general aren’t set to fall materially, and caps on debt-to-income ratios are still on the cards for 2024,” Davidson says.

“We should also never lose sight of the mortgage repricing process that is still going on for existing borrowers as they face up to finally seeing the interest rate they’re paying reach prevailing market levels over the next six to nine months. So far, this process has been smooth, but it’s a lingering risk to watch, especially if we do start to see some job losses coming through in 2024.”

Davidson says he is always conscious of the scope for housing activity and prices to move faster than anticipated, due to the emotional or human factor involved, but right now it’s hard to see the market quickly shaking off the weight of high mortgage rates.