New Zealand house-price slump may be over, CoreLogic says
NEW Zealand house prices steadied in September following 17 consecutive monthly declines, adding to signs that the property market slump has ended.
Values were unchanged from August, CoreLogic New Zealand said on Wednesday (Oct 4) in Wellington. From a year earlier, prices dropped 7.3 per cent – the smallest annual decline since January.
Expectations that interest rates will not rise much further has delivered a fillip to the property market, which has dropped 13 per cent from its peak, according to CoreLogic. The Reserve Bank is expected to keep the Official Cash Rate unchanged at 5.5 per cent later today while leaving the door open to another increase if needed.
“Housing market confidence seems to have turned a corner,” said Kelvin Davidson, chief property economist at CoreLogic. “It was only a matter of time until property values found their floor and then started to rise again, and it’s this emerging growth we’re starting to see in the data.”
High net immigration is adding to demand while low unemployment and strong wage growth are giving buyers confidence that they can afford homes, he said.
The prospect of a change in government at the Oct 14 election may also be stoking buyer confidence, Davidson said. Opinion polls show the main opposition National Party is best placed to lead a new administration and it has pledged property friendly policies, such as a phased reinstatement of tax deductibility for investor mortgage interest payments.
Still, CoreLogic expects the market recovery to be “muted” because homes remain unaffordable for many.
Mortgage costs are challenging for many households and are not set to fall anytime soon, Davidson said. A number of lenders have raised home-loan interest rates in recent weeks reflecting higher funding costs.
The national average house price was NZ$905,445 (S$734,290) in September, the lowest since May 2021, according to CoreLogic. Prices rose in three of the nation’s six largest cities, including Auckland, and were unchanged in the capital city Wellington. BLOOMBERG
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
