The rebound in property prices across New Zealand has continued, with prices rising 1 per cent in December, according to CoreLogic NZ.
The increase marks the third straight month of price increases, with values up 0.4 per cent in October and 0.7 per cent in November.
However, national property values remain 3.3 per cent below this time last year, and 11.4 per cent lower than the peak from two years ago.
The average value now stands at $924,489, up 2.1 per cent over the past three months since September’s cyclical trough.
CoreLogic NZ Chief Property Economist, Kelvin Davidson, said while the continued gains in property values in December weren’t a surprise, he tipped the market to remain patchy in 2024.
“A further rise in property values in December seemed almost inevitable given housing market sentiment has risen in recent months,” Mr Davidson said.
“This is off the back of several factors, including the change of government, a peak – and even some falls – in mortgage rates, continued growth in employment, and soaring net migration.”
Mr Davidson said affordability issues continued to weigh on the market, driven by higher interest rates as well as caps on debt-to-income ratios.
“As such, although the general upwards trend for property prices is likely to continue in 2024, it may not be smooth from month-to-month, with some results stronger, but others much weaker,” he said.
“Underlying that patchy national picture would be variability at the regional level too, with the main centres potentially seeing the biggest boost from inwards migration, but provincial markets less supported.”
The gains were widespread across the main centres in December, with Tauranga, Auckland, and Christchurch all registering increases of more than 1 per cent.
Within Auckland, Manukau recorded the strongest rise in property values in December, up by 2.1 per cent, although modest falls prior to that meant that the quarterly increase was ‘only’ 1.6 per cent.
North Shore, Waitakere, and Auckland City were also robust, while Rodney and Papakura were relatively flat, and Franklin recorded a fall of 0.9 per cent in December, and 0.8 per cent over the past three months.
“Auckland’s sub-markets are all starting to look more robust, apart from a bit of lingering weakness in Franklin,” Mr Davidson said.
“This serves as a reminder that the upturn in 2024 might not all be one-way traffic, with some inconsistency from month-to-month and across regions.
“However, with housing sentiment shifting to the upside and mortgage rates at least not going any higher, it seems likely that Franklin could return to the pack shortly too.”
Wellington’s sub-markets generally saw further growth in December, especially in Lower Hutt, with a gain of 2.6 per cent.
Lower Hutt is now 4.5 per cent higher since September, trumped only by Porirua, at 4.9 per cent quarterly growth taking its annual change to 1.1 per cent.
“Following large declines through the downturn, the wider Wellington market is now turning around fairly quickly, however all parts of Wellington remain quite a bit lower than their previous peaks,” Mr Davidson said.
“That said, Wellington City itself remains a little lacklustre with a modest fall in values in December.
“Of course, with an average value greater than $1 million, affordability will still be a key issue for some buyers in Wellington City.”
Mr Davidson said the expectation that 2024’s property market upturn could be variable is reinforced by the provincial value results for December.
For example, Gisborne showed a 2.5 per cent monthly fall despite a 0.4 per cent rise since September, with Napier also down in December.
By contrast, Whanganui, Rotorua, and Queenstown all rose 2 per cent or more.
Mr Davidson said Queenstown still stands out as an area that has generally defied the downturn, with values now almost 6 per cent higher than a year ago, and sitting at a new peak of about $1.77 million.
“Clearly, Queenstown is a still a magnet for wealthy buyers, whether local or from out of town,” he said.
“And strong demand to live and work in the area as tourism snaps back is seemingly contributing to price pressures as well.”
Mr Davidson said 2024 might not see the strong result many are hoping for.
“December brought 2023 to a close on a strong note for property values, but I suspect that the likely recovery over the year ahead could undershoot some expectations, and prove to be a little underwhelming by past upswings,” he said.
“A lot hinges on how mortgage rates move but also how any falls are counteracted by tighter lending restrictions from the Reserve Bank, such as DTIs.”
He said he anticipates sales activity to rise by about 10 per cent this year, while national property values could rise by about 5 per cent, averaging out a wider range of regional results.
