National House Values Decline for Second Consecutive Month, Auckland Leads Slowdown

Date Published: 7 June 2024

Key Facts

• National house values dipped by 0.2% in May following a 0.1% fall in April.
• Auckland led the slowdown with a 0.8% decrease in May.
• Christchurch and Hamilton saw gains in property values, with Christchurch up by 0.5% and Hamilton by 0.8%.
• The national average property value stands at $931,438, which is 1.0% higher than a year ago but still 11% below the peak.
• Regulatory changes include the scrapping of first home grants and the easing of loan-to-value rules.
• High mortgage rates and an increased number of listings are factors contributing to the buyer’s market.
• The rest of 2024 is expected to see subdued housing market activity and prices.

Article Summary

According to CoreLogic, New Zealand’s national house values have experienced a decline for the second consecutive month, with a 0.2% decrease in May following a minor 0.1% fall in April. Auckland spearheaded this slowdown, experiencing a 0.8% reduction in property values. Other regions like Wellington and Tauranga also saw declines, whereas Christchurch and Hamilton recorded some gains. The national average property value is currently $931,438, a 1.0% increase from the previous year, but still approximately 11% below its peak value.

CoreLogic’s Chief Economist, Kelvin Davidson, attributes the market’s shift to various recent regulatory changes, such as the abrupt termination of first home grants and the easing of loan-to-value rules. Despite these changes, high mortgage rates continue to suppress market momentum. Davidson indicates that the government’s upcoming tax cuts are unlikely to induce a significant change in this trend. Therefore, the market is expected to remain relatively static throughout the rest of 2024, with only modest fluctuations in house values and sales volumes.

Auckland has particularly felt the brunt of this slowdown, with several sub-markets such as North Shore and Manukau experiencing notable declines. Wellington’s property market has also struggled to make substantial gains, with the wider Wellington housing market remaining 15-20% below its peak values. Outside the main centres, the property market has been a “mixed bag,” with regions like Queenstown seeing growth while others like Invercargill and Hastings faced declines.

Davidson emphasizes that affordability remains a significant issue, compounded by high mortgage rates and a substantial stock of property listings, which gives buyers the upper hand in negotiations. Moreover, the shortening of the brightline test may bring more properties to the market, potentially further subduing prices. Expectations point towards a continued sluggish housing market for the remainder of the year, both in terms of sales and property values.

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