The housing market downturn appears to be over in the country’s three biggest cities.
The latest figures from the OneRoof-Valocity House Value Index show house prices in Auckland, Christchurch and Wellington registered their first quarterly increase in more than a year.
Auckland’s average property value was up 0.3% to $1.294 million in the three months to August 21, ending a slump that saw property values in the city tumble more than 18%.
The increase, while small, puts the city’s housing market on a more optimistic footing as it heads into spring.
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Christchurch’s average property value jumped 2% over the quarter to $758,000, while the growth for Canterbury overall was 0.9%.
Growth in the capital was smaller, just 0.1% over the quarter, taking the city’s average property value to $981,000.
The bump wasn’t strong enough to end the decline in the Wellington Region, where the average property value was down 0.1% over the quarter, but the figures indicate it won’t be long before the region as a whole turns the corner.
The figures also point to an end to the downturn for New Zealand overall, with the nationwide average property value down 0.1% over the last three months but showing week-on-week growth since the start of July.
Also up over the quarter were Southland (0.6%), Hawke’s Bay (0.5%) and Gisborne (0.2%), although the latter regions have been plagued by low listings and market volatility as a result of the fallout from Cyclone Gabrielle.
The OneRoof-Valocity House Value Index figures also show the slump has finally caught up with West Coast, where the average property value is down 0.9% over the quarter – the region's first drop in value since the start of Covid.
OneRoof editor Owen Vaughan said the data backed up the pick-up in sales activity in Auckland, Christchurch and Wellington. “The figures are a stunning turnaround for the housing market. Just three months ago, property values in Auckland were declining at a rate of 3%.
“Since the start of June, we’ve noticed more buyers at open homes in all three metros and auction rooms spring back to life – unimaginable back in April and May.”
OneRoof editor Owen Vaughan: “Since the start of June, we’ve noticed more buyers at open homes in all three metros and auction rooms spring back to life." Photo / Fiona Goodall
Vaughan added: “Driving the lift has been a shortage of available stock, with new listings over the last three months down 13% year-on-year and total listings down 1.4% over the same period.
“The drop-off appears to be easing in Auckland, with new listings in the city in the last three months down only 7% on the previous three-month period. The decline in new listings in Christchurch and Wellington, though, is higher, and is likely to be putting real pressure on buyers.
“Real estate agencies have been reporting a steady increase in appraisals, which suggests new listings volumes will rise in spring but there still seems to be some hesitation in the market, with agents telling OneRoof that potential vendors are waiting until the election is over before coming to market.”
The quarterly lift in Greater Auckland takes the region’s average property value back to March 2021 levels. Driving the overall rise in the region are strong showings in Auckland’s North Shore and Manukau districts (both up 0.8% over the quarter) and Auckland City (0.5%).
The figures also show which locations are primed to lead the house price revival. Of the 786 suburbs with 20 or more settled sales in the last 12 months, 279 (or more than a third) recorded quarterly value growth. That’s more than double the number of suburbs up quarter-on-quarter at the end of July.
Vaughan said: “The biggest value increases were in some of the country’s cheapest and far-flung suburbs, but volatility in the value data in these locations – driven by low or patchy sales activity – suggest the market revival will be strongest and firmest in the country’s major metros.
“Analysis by OneRoof and Valocity identified 100 major metros suburbs where property values were up in the three months to August 21 – up from just 40 at the end of July.
“High-end neighbourhoods in Christchurch were enjoying boom-like lifts in their average property value, with Merivale up 6.5% and Sumner up 6.1%, while in Auckland value growth was strongest in Great Barrier Island, Blockhouse Bay and Ostend.”
Valocity global CEO of real estate Helen O’Sullivan: "I’m cautiously optimistic that the floor has been reached." Photo / Fiona Goodall
On the rise: Christchurch is leading the housing market revival. Photo / Peter Meecham
Helen O’Sullivan, global CEO of real estate for Valocity, said the latest figures suggest prices have largely stabilised, and are even lifting in some areas. “Other data suggests transaction volumes – a key measure of market confidence – are holding their ground,” she said.
“I’m cautiously optimistic that the floor has been reached, in part because transaction volumes have been so low that there must be a level of pent-up demand in the market. However, bank wholesale funding costs are still high and retail rates are creeping up, so there is still a certain level of caution around. I expect the current signals to translate into an increase in transactions – but a return to more ‘normal’ levels of activity rather than an irrational surge.”
Valocity senior research analyst Wayne Shum said much of the increased sale activity was around properties in the $600,000 to $800,000 value bracket, especially in Auckland. “The sweet spot appears to be in the first-home buyer bracket, although the value lifts in higher-value suburbs, like Remuera and Merivale, suggest some buyers are leaping on the opportunity to buy into desirable neighbourhoods at the bottom of the market.”
He added that it was too early to consider the recent uptick a “value rebound”. “The market is still facing some strong headwinds, with high mortgage rates putting a cap on the amount buyers can pay and policy detail from the major parties still light when it comes to housing.”
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