New Zealand house prices post smallest decline this year

NEW Zealand house prices posted their smallest monthly decline this year, adding to signs that an 18-month property market slump could be in its final stages.

Values fell 0.2 per cent in August from July, CoreLogic New Zealand said on Friday (Sep 1) in Wellington. From a year earlier, prices dropped 8.7 per cent – the slowest annual decline since January.

The moderating pace of price declines and the Reserve Bank’s signal that the Official Cash Rate is unlikely to rise any further are being seen as a fillip to the property market, which has dropped 13 per cent from its peak, according to CoreLogic. The central bank said last month that it expects prices to rise 2.7 per cent in the second half of this year.

“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 Davidson, chief property economist at CoreLogic. “Mortgage rates are now likely to be close to their peak. On top of that, immigration has significantly boosted property demand.”

Low unemployment and strong wage growth are also giving buyers confidence that they can afford homes, while looser rules on low-deposit lending are giving more people access to finance, he said.

Still, CoreLogic expects the market recovery when it arrives to be “slow and patchy” rather than the rampant upturn seen in 2020-21, when prices rose an average 2 per cent a month.

Homes remain unaffordable for many and mortgage rates are set to be higher for longer, Davidson said.

“In that environment, buyers won’t feel excessive pressure to secure a deal before somebody else does, in turn keeping some kind of lid on price growth,” he said.

CoreLogic constructs its index on a rolling three-month basis using prices once settlement is agreed. That means its series lags other housing indicators, some of which are showing prices starting to rise.

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The average house price slid to NZ$905,466 (S$730,066) in August, the lowest since May 2021, according to CoreLogic data. Prices fell from a month earlier in five of the nation’s six largest cities, with Christchurch posting a gain.

From a year earlier, Auckland house prices fell 10.7 per cent while values in capital city Wellington dropped 11.8 per cent. BLOOMBERG