News & Research

CoreLogic HPI: Wellington remains at ‘epicentre’ of downturn as value declines moderate elsewhere

Aotearoa New Zealand’s housing market downturn continued to ease in the past month, with the rate of decline in national property values halving month-on-month in November.

CoreLogic’s House Price Index (HPI) shows property values fell -0.6% in November, less than half the rate seen in October (-1.3%).

While the slowing trend was also evident in Wellington, the wider capital area continued to set the pace for value falls over the month, with Porirua in particular seeing a significant deterioration in home values.

CoreLogic NZ Head of Research, Nick Goodall, said the Wellington area still appears to be outpacing the other main centres this downturn.

“Porirua’s values fell -4.7% over the month, and -8.7% over the quarter. That’s the largest monthly and quarterly declines seen across any main urban area. Persistent falls in Lower Hutt, an area that has seen significant development of townhouses, has culminated in values being -19.4% down on the same time last year,” said Mr Goodall.

Around the main centres, Dunedin again showed some resilience, with a minor lift (0.3%) in values in November, after no change in October, while values in Christchurch were flat in November after a minor fall (-0.2%) in October. Tauranga property values showed signs of flattening, though Mr Goodall warns one swallow doesn’t make a summer, so the minor drop of -0.2% should be treated with caution.

Similar to the nationwide results, both Auckland and Hamilton experienced a moderation in the pace of value declines in November, at -0.6% and -0.7% respectively.

Property values continue to track lower across the entire Super City, though Mr Goodall notes the average value in the outer areas of both Rodney and Franklin remain above where they were last year.

“The same cannot be said of the larger, more expensive markets, in particular the more centrally located properties in the old Auckland City council area, where values are -4.3% down on the same time last year. The signs of moderation in value falls were common across Auckland though, with Auckland City actually producing the best result of ‘only’ a -0.2% fall over the month.

“While these signs of moderation in falls will be encouraging to mortgage holders, we are cautious of it being a false dawn, with many sales transactions likely to have occurred before the recent round of pessimism hit the market, following the renewed expectations of increasing interest rates,” he said.

Regional House Price Index results

There were some divergent results across the other main urban areas. In particular Whangārei property values experienced a noticeable lift in November (1.5%), while the resilience of Queenstown property values is holding true (0.2% increase over the month) and values in New Plymouth have also remained more robust, currently 6.2% higher than they were a year ago.

The central/lower North Island and Hawke’s Bay areas meanwhile have gone through a more persistent weak period, with all of Hastings, Whanganui, Palmerston North and Napier continuing to fall over the month, leading to values being roughly -5% or more down since August.

Impact of RBNZ rate hikes and forecast

Mr Goodall said the latest RBNZ Monetary Policy Statement (MPS) was hotly anticipated and didn’t fail to deliver.

“Along with the expected 75 basis point increase in the OCR came a very deliberate directive to consumers to ‘prepare for more to come’. This included the consideration of a 100 basis point lift and a sharp increase in the forecast OCR track, now tipped to peak at 5.5% within six months, a 1.4 percentage point increase from only three months ago.”

The Reserve Bank again reiterated their stance of needing to tighten monetary policy to fight inflation, despite the likely downsides that will come along with that tightening. The most important impacts being a recession, increased unemployment and further value erosion of our largest asset base, the housing market.

Goodall said the comparison to Australia provided plenty of intrigue.

“The RBNZ’s strong commitment to tightening is in stark contrast to the RBA who are now taking a wait and see approach from previous increases to their OCR, stressing they are mindful of mortgage holders moving onto rates above the level they’ve been tested at. The RBNZ will be wary of this too but appear comfortable in the knowledge they can always reduce the OCR in the future to stimulate the economy and borrowing if required.

“From a practical sense, if we assume a 2.5% margin between the OCR in NZ compared to the special one-year fixed rate mortgage holders should consider the likelihood of rolling onto an 8% interest rate next year. This margin of 2.5% is more likely than the current 2.3% given the funding for lending programme ends on 6 December, so access to cheap funds is reduced,” he said.

Outlook for NZ housing values

“As we consider the prospects of the housing market heading into 2023, affordability remains one of the key influential factors,” said Mr Goodall.

“Falling house values are starting to improve many of the measures we track, but persistently increasing interest rates is impacting mortgage serviceability. The latest data reports an average 50% of income is required to service a mortgage with 80% loan-to-value ratio for the average dwelling value.

“As long as interest rates continue to increase, it’s likely housing values will continue to fall. The question is at what point will the RBNZ become concerned enough about falling house prices and an upcoming recession (including job losses) to pull back in the inflation war.”

Download the November House Price Index


Nick Goodall

Meet Nick Goodall

Head of Research


Nick is an ace with numbers, and he has a knack for transforming facts and figures into compelling stories to inform a wide range of audiences. As our Head of Research, Nick is at the forefront of the latest trends driving the NZ property market.

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