The New Zealand real estate market rolls into spring on the back of improving news, with the decline in average property values across New Zealand slowing down in August, while several vital sub-markets demonstrated increases, according to the CoreLogic House Price Index (HPI).

For instance, North Shore and Manukau in Auckland have recorded two consecutive monthly rises, as have Upper Hutt and Wellington City. 

During August, national property values experienced an infinitesimal 0.2% decrease, accompanied by a more moderate 1.8% drop over the three months of winter. The average property is now worth $905,466, which is 13.2% below the peak (or -$137,795) but still 24.3% ($177,190) higher than March 2020’s ‘pre-COVID’ figure[i].

Kelvin Davidson, Chief Property Economist at CoreLogic NZ, asserted that it’s just a matter of time before the national average stabilises or potentially begins to increase. Kelvin also highlighted the potential demand boost if the National Party secures victory following their recent policy announcements.

“Although values have continued to edge lower nationally, the floor is likely to be near, with many of the key fundamental drivers now turning around,” said Kelvin.

According to Kelvin, mortgage rates are likely hovering around their peak, though some minor fluctuations could still occur due to global market uncertainties and corresponding wholesale financing costs. “On top of that, migration has significantly boosted property demand and labour markets remain robust. We’re also now starting to see the impact of the loosening in the loan-to-value ratio rules from June 1st flow through to more low-deposit lending for both owner-occupiers and investors with a 35-40% deposit, who were previously locked out.”

Davidson also pointed out the potential implications of the upcoming election and the implications of a change in government. “We also need to consider the possibility that National wins the election and pushes through its new housing policies. 

“A shorter Brightline Test may drive increased investment purchases, but also some sales by existing investors, given no/reduced liability for capital gains tax. 

“The softened foreign buyer rules could also boost demand and prices, although probably more so in local markets than across NZ as a whole. In Queenstown, for example, about 10% of properties are valued at $2 million plus, and we know it’s already more popular with foreign buyers, who could potentially exacerbate the shortages of stock at ‘affordable’ prices that already exist,” Kelvin added. 

Keith Niederer, General Manager, NZ, Raine & Horne, stated, “The outlook is more optimistic than six months ago, and once the election is behind us, we anticipate improved market activity. 

“Both sellers and buyers are likely to engage actively until the year’s end, driven by the delayed start to the spring market due to the election.”

If you’re looking to buy or sell a property, contact your local Raine & Horne estate agent today.