Rotorua, Queenstown and Tauranga Lead Quarterly House Price Growth Amidst Nationwide Slowdown, QV Data Indicates

Date Published: 16 January 2024

Key Facts

• New data from QV shows that Rotorua, Queenstown and Tauranga led the house price growth in the December quarter with increases of 6%, 3.3% and 3% respectively.
• The average residential property value increased by 0.6% in the same period, which is a slower rate than the 2.3% reported in the three months to the end of November.
• New Plymouth recorded the smallest average increase of 0.4%, while Auckland, Wellington and Christchurch experienced more substantial growth, with rates of 1.9%, 2.4% and 2.5% respectively.
• The QV operations manager expects this growth trend to continue over the next few months but to slow down in the autumn.
• The median price for first-home buyers dropped to $649,000 in December, compared to $665,000 in November and $700,000 in mid 2023.
• Increased listings and available stock balanced supply and demand in key markets, leading to less competition and a slump in home value growth.
• High net migration and the expected reintroduction of interest deductibility for property investors is influencing the housing market. However, current interest rates, which are expected to remain for much of 2024, are the major factor inhibiting home value growth.
• Concerns are growing about the impacts of climate change and natural hazards on properties, and the possible implications of risk assessments on the housing market in high risk areas. Some insurers have indicated plans to adjust prices or withdraw coverage in certain risk areas.

Article Summary

The house price growth decelerated in the last quarter of 2023, recording an average residential property value increase of 0.6%, down from 2.3% increase reported in the previous quarter ending in November, as per QV data. Notably, Rotorua, Queenstown, and Tauranga topped the growth charts with hikes of 6%, 3.3%, and 3% respectively in the said quarter.

James Wilson, the QV operations manager, attributed Rotorua’s growth to heavier transactions in the high-end market segment nearing Christmas. He also pointed out that the median price experienced a drop for first-home buyers in December, reaching $649,000 from $700,000 in mid-2023.

The data revealed that a gradual increase in property listings and available stock for purchase managed to balance supply with demand in primary markets, thereby minimizing competition and slowing national home value growth rate. Wilson anticipates this trend to persist for the first few months of 2024 before seeing further decrease as we approach autumn.

Wilson noted that while current interest levels significantly restrain home value growth, high net migration and expected reintroduction of interest deductibility are also impacting housing market. However, mounting concerns related to climate change and natural disasters, along with the possibility of risk-based insurance repricing in high risk areas, are emerging as elements to watch in the property market for 2024.

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