Property values in Aotearoa New Zealand fell -0.2% in December, marking the ninth drop in the past 10 months, according to CoreLogic's hedonic Home Value Index (HVI).
The national median value now stands at $803,624, which is 3.9% lower than a year ago and equivalent to a drop of around $32,200. New Zealand home values are also still 17.6% below the post-COVID peak, although 16.2% higher than the pre-COVID level from March 2020.
Around the main centres, a slightly more consistent picture is emerging, with Kirikiriroa Hamilton rising by 1.0% in December, Tauranga by 0.4%, Ōtepoti Dunedin 0.3%, and Ōtautahi Christchurch holding steady. But there is still downward pressure in Tāmaki Makaurau Auckland (-0.4%) and Te Whanganui-a-Tara Wellington (-0.8%).
CoreLogic NZ Chief Property Economist, Kelvin Davidson said that December's fall in values at the national level was an apt summary for 2024.
"Since the mini-peak back in February, property values have drifted lower at a modest pace, initially reflecting the high level of mortgage rates, but more recently the weakness of the labour market,” he said.
“December's mild drop was simply a continuation of that pattern and sums up the market's soggy performance in 2024."
He pointed out that there has been a discernible slowdown in the rate of decline in recent months, potentially signalling that the floor for property values could be within reach. “We're still seeing some sluggish results in Auckland and Wellington, but firmer trends seem to be starting to emerge elsewhere."
"That would certainly be consistent with the influence of lower mortgage rates, particularly the falls for the internal serviceability test rates at the banks. The popularity of either floating loans or short-term fixes at present is helping those lower rates pass through fairly quickly too.”
“However, job insecurity will still be playing a restraining role, as is the elevated levels of listings available on the market."
"These 'conflicting forces' may remain a key theme for the property market in 2025 as well, with the effects of lower mortgage rates dampened to some extent by a still-sluggish economy and credit restrictions in the form of debt to income ratios."
| Monthly Change | Median value |
Aotearoa New Zealand | -0.2% | $803,624 |
Tāmaki Makaurau Auckland | -0.4% | $1,066,382 |
Kirikiriroa Hamilton | 1.0% | $743,667 |
Tauranga | 0.4% | $907,318 |
Te-Whanganui-a-Tara Wellington | -0.8% | $789,564 |
Ōtautahi Christchurch | 0.0% | $664,830 |
Ōtepoti Dunedin | 0.3% | $607,327 |
Tāmaki Makaurau Auckland
Most of Tamaki Makaurau Auckland’s sub-markets saw falls in property values in December, ranging from a modest decline of 0.1% in Manukau, up to 0.5% in Rodney, and a fall of 0.7% apiece in Auckland City and Franklin. However, North Shore ticked up by 0.1% in December and has also seen values rise over a slightly longer horizon since September as well.
Mr Davidson noted: “Abundant supply is still a significant restraint on property values in Auckland, both in terms of existing properties listed for sale, but also the flow of new-build stock being completed. North Shore has been bucking the trend to some extent in recent months, although with affordability still likely to be a challenge for many buyers in that market too, it's difficult to see a fresh boom kicking off anytime soon."
Te Whanganui-a-Tara Wellington
The wider Te Whanganui-a-Tara Wellington area remained soft in December, with falls in values across the board. The 0.1% decline in Kapiti Coast was modest, but Wellington City (-0.9%) and Lower Hutt (-1.2%) were notably more sluggish.
Commenting on the Wellington market, Mr Davidson said: "It was more of the same in December, with property values generally remaining weak. To some extent, housing affordability has been restored in Wellington off the back of the significant fall in values in the past 2-3 years. As such, the latest declines seem more attributable to public sector cut backs and the negative effect this will be having on economic and housing market sentiment across the wider region."
Regional results
After starting to show some resilience in November, some provincial property markets continued that nascent trend in December. For example, Whangarei, Napier, and Palmerston North all edged up by 0.2%, with Nelson's figure at 0.1%. Elsewhere, any falls remained fairly modest, although Gisborne and Hastings did both see values decline by 0.5% in December.
“It's early days, but we may now be seeing the influence of lower mortgage rates starting to come through providing a subtle boost to property values around some parts of provincial NZ," Mr Davidson noted.
"Housing affordability can sometimes be more favourable in these areas too, alongside the solid support provided by farming-based economies, which have been holding up relatively well lately."
"However, a sudden or strong upturn in property values across large swathes of the country still doesn't seem particularly likely until the wider weakness of the labour market starts to turn around."
Property market outlook
Looking ahead to 2025, Mr Davidson noted that many of the key drivers for the property market might continue to work in opposing directions – such as the supportive influence of lower mortgage rates, but the restraint from abundant listings and labour market uncertainty.
"We suspect that 2025 could prove to be a year of conflicting forces for NZ's housing market, with the net result being a relatively subdued upturn in sales volumes and property values. Our expectation is that values could increase by around 5% in 2025 across NZ as a whole, which would be pretty subdued compared to some past cycles."
"The recent falls in property values may well come to an end shortly, but one factor for the year ahead that the market hasn't had to contemplate before is likely to be the effect of debt to income ratio rules. These may not be a factor for everybody and won't stop mortgage lending dead in its tracks. But by the middle of the year it certainly wouldn't be a surprise if the DTI limits are a very common part of the general discussion around NZ's mortgage market."
"In addition to an underlying economy which might take a bit of time yet to get back on its feet, the DTI caps are another reason for caution about the prospects for the property market in 2025," Mr Davidson concluded.
CoreLogic New Zealand