National home values rose 0.3% in February, continuing the decelerating trend seen since December, CoreLogic's House Price Index shows.
Property values have risen for five consecutive months, however the pace of gains is down from November's 0.4% rise and December's 1.0% increase.
The average property value across NZ now stands at $930,495, up 2.8% from September's trough, but still 10.8% below the recent peak.
Most of the main centres were relatively subdued in February, with Hamilton, Tauranga, and Christchurch seeing marginal 0.1% rises, while Dunedin and Auckland ticked up by 0.2%. Wellington saw a stronger 0.6% rise in February, but that was after a below-average result in January.
CoreLogic NZ Chief Property Economist, Kelvin Davidson, said the recent sets of muted house price figures show that this isn't a straight-line market recovery.
"Given that mortgage rates remain high and property sales volumes through January remained at near record lows, buyers and sellers are still taking their time and this is flowing through to more subdued value growth," Mr Davidson said.
"For new entrants to the housing market, there are still significant challenges in terms of saving the deposit and satisfying loan serviceability criteria. Investors are also facing challenges from high mortgage rates too, while even existing owner-occupiers looking to move up the ladder still need to assess their finances closely.
"While the official cash rate remains on hold for now, the risk of a further rise in the short term hasn't dissipated altogether, and the likelihood of official cash rate cuts aren't on the table for the foreseeable future either. This will mean shorter-term fixed mortgage rates, such as the one and two year loans, could remain elevated for a while yet.
"As a result, we could continue to see mixed results across the housing market, with localised factors affecting each region and stretched affordability continuing to restrict growth in property demand and therefore price growth too," he said.
CoreLogic House Price Index
National and Main Centres
Auckland
In February Auckland's sub-markets were relatively bunched, with the exception of North Shore (-0.8%) and Auckland City (0.7%). Over the past three months, each market has seen property values rise, with Manukau up at a 3.5% gain, while Franklin has just edged back into positive territory on a 12-month comparison (0.1%).
“Auckland's market has clearly picked up from the lulls seen over 2022 and for much of last year as well, but even though population growth is strong, the challenges from stretched housing affordability and high mortgage rates remain firmly in place. It'll be another fascinating year for our largest housing market," Mr Davidson said.
Wellington
After a softer month in January, there might have been a bit of 'catch up' growth around Wellington in February. Each of the sub-markets saw values rise at least 0.5%, with Lower Hutt and Kapiti Coast rising by 0.8%. In Porirua and Lower Hutt, values are now about 2% higher than a year ago, although other parts of Wellington are still lower than February 2023.
"Wellington's data over January and February is a good illustration of wider market trends at present – one month softer, one month stronger. This could well be a dominant pattern across most of the country in 2024," Mr Davidson said.
Regional House Price Index results
Outside the main centres, many of the key urban areas also saw muted value change over the month, ranging from a -0.4% dip in Rotorua and Hastings, to a 0.5% rise in Whanganui.
Mr Davidson noted that the clear exception continued to be Queenstown, which recorded a 0.9% rise in February, taking its quarterly gain to 3.8%, and the annual rise to 7.8%.
"At present there's just no stopping the Queenstown property market. Wealth must be playing a key role, with housing much less affordable or accessible for anybody without that accumulated equity and instead relying on their local income," he said.
Other Main Urban Areas (ordered by annual growth)
Property market outlook
"Housing market sentiment has improved a little in recent months, and we're anticipating growth in national sales volumes of about 10% this year, with prices potentially rising by around 5%. But that’s coming from a low base, and the averages could also mask quite a bit of regional variance, with the main centres boosted by stronger population growth, yet some other areas perhaps held back by affordability concerns," Mr Davidson said.
"It will also be worth keeping an eye on each of the various buyer groups. First home buyers are still enjoying market conditions for now, using KiwiSaver for at least part of the deposit, and making full use of the low deposit lending allowances at the banks. By contrast, mortgaged investors remain a bit quieter. However, they're a group to watch closely in the coming months, as tax and lending regulations shift."
Download the CoreLogic House Price Index
CoreLogic New Zealand