After a punishing year-and-a-half of house price falls and interest rate rises, the tide appears to have firmly turned for New Zealand’s housing market, with the nationwide average property value recording quarterly growth for the second month in a row.

The latest figures from the OneRoof-Valocity House Value Index show momentum is building in the country’s biggest markets, with the number of regions enjoying quarterly lifts in their average property value doubling within the space of a month.

Property values in the country’s biggest housing markets, Auckland and Canterbury, were up by more than 2% in the three months to the end of October while New Zealand’s average property value grew 1.7% over the same period to $952,000.

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Of the growth holdouts, only Nelson and West Coast appear to be sliding backwards, with the rate of value decline in Northland and Taranaki easing.

The OneRoof-Valocity figures show that for the first time since March 2022, all seven of the country’s major metros recorded quarterly lifts in their average property value, with Dunedin and Queenstown-Lakes joining the growth club in October.

OneRoof editor Owen Vaughan said: “Market confidence has been strongest in the bigger centres, but is starting to spread to smaller regional metros. Whangarei, Napier and Invercargill all turned the corner in October. The biggest success story continues to be Christchurch. Its average property value was up 2.5% over the quarter to $768,000, driven by strong first home buyer activity.

“Stock levels remain tight, though. New listings for Canterbury in October were down 3.4% year-on-year, with total listings up only 7.5% on what was poor October last year. Encouragingly, Auckland new listings for October ticked up almost 2% year-on-year but overall stock is down 8.3% in the region.”

Vaughan said the election had impacted listings, with agents telling OneRoof in the lead-up to the October 14 poll that hesitant vendors were waiting for a result before bringing their home to market.

“There does appear to have been a small post-election bump in the number of homes for sale on OneRoof but it’s early days yet, and two weeks’ worth of new listings is not enough to draw any firm conclusions about the direction of the market,” he said.

“However, more confidence in the market is likely to strengthen price expectations, and the figures suggest there is momentum building, with the median search price up 2% month-on-month for New Zealand and up 5% for Auckland. While search price doesn’t necessarily reflect the eventual sale price, it’s a good indication of where vendor sentiment is right now.”

The OneRoof-Valocity figures also showed changing market fortunes at a suburb level. A total of 566 suburbs recorded value growth in the three months to the end of October, almost 100 more than the tally at the end of September.

The biggest lifts continue to be found in Christchurch, with Merivale and Fendalton topping the table with quarterly growth of 8.1% and 7.9% respectively. Property values in six of the city’s suburbs are now back to peak levels; and values in another nine are less than $10,000 short of peak.

Of the 204 Auckland suburbs with 20-plus settled sales in the last 12 months, 180 recorded quarterly growth – up from 150 the month before. Growth was strongest in Wesley (+7.7%), New Windsor (+6%) and Pinehill (+6%), but price momentum was clear in a further 105 Auckland suburbs, where quarterly growth exceeded the city-wide growth number of 2.3%. The lift in the wealthy beach enclave of Omaha brought average property value back to its post-Covid peak of $2.863m.

Remuera in Auckland, is one the 566 suburbs that recorded growth in the three months to the end of October. Photo / Fiona Goodall

OneRoof editor Owen Vaughan: "There does appear to have been a small post-election bump in the number of homes for sale on OneRoof but it’s early days yet." Photo / Fiona Goodall

Of the 927 New Zealand suburbs analysed, 32 have returned or are close to returning to post-Covid peaks.

Most of the growth suburbs (363) had an average property value of below $1m, reflecting the continued dominance of first-home buyers in the market. However, the revival has also given a boost to some of the country’s most expensive suburbs, including St Marys Bay (+4.2%), Remuera (+4.2%) and Herne Bay (+3.2%).

Helen O’Sullivan, global CEO of real estate for Valocity, said while the incoming National Government had pledged to reintroduce interest deductibility for investors and reduce the bright-line test from 10 to two years, it was too early to assess the impact of the election result on the investor market.

"High net migration is driving rental demand and rental prices, but interest rates are still at challenging levels. Until interest rates ease, the prospect of interest deductibility will only serve as pain relief, rather than a reason to make new purchases," she said.

Wayne Shum, senior research analyst for Valocity, said the continued absence of investors showed in the mortgage registration data, with first-home buyers continuing to dominate, with a 45.1% share in September, down from a two-year high of 45.5% in August.

“The recent decline in annual inflation to 5.6% may indicate the end of OCR rises in this cycle. However, the wholesale cost of funding is still high, leading to further mortgage rate increases. Global uncertainties and conflict in the Middle East are also likely to add to economic pressures.”

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Note: Property value data derived from the OneRoof-Valocity House Value Index, taken on October 20, 2023. Only suburbs with 20-plus settled sales in the last 12 months covered. Rolling changes encompass a 13-week period that includes the seven days after the date highlighted. Listings data from OneRoof.co.nz, taken on October 20, 2023. New listings figures cover the 30 days to October 20, 2023.


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