Housing upturn broadens, but underwhelming 2024 beckons

CoreLogic NZ Chief Property Economist Kelvin Davidson said there are signs of the country's upturn slowly broadening looking at growth patterns across the past three months.

Average property values recorded a 1.1% rise nationally over the three months to November, and also saw the smallest annual drop (-4.5%) since the same time last year.

The main centres were fairly strong over September to November, with only Tauranga recording a decline (-0.6%) in median property values.

Dunedin lead with a nearly 3% lift in values and Christchurch closely followed at 2.0%. Both Auckland and Wellington saw property values increase by 1.2%.

However, at a regional level, areas such as Whangarei, New Plymouth, Kapiti Coast, and Nelson have continued to drift lower in recent months.

Mr Davidson said property sales volumes have continued to trend upwards for seven months in a row, however considers the growth rate is still on the 'slow side'.

"Property sales across November were up by around 19% from the year prior. However, it's from such a low base for activity, that this growth rate isn’t yet translating into a significantly higher number of sales."

While property market listings have now begun to wind down for the holiday period, total stock levels have remained lower than previous years, even during the normal Spring influx.

"New listing flows into the market are nearly 12% down from this time last year, which has overall limited buyers' choice of fresh stock," he said.

Mr Davidson said the market's recovery has certainly arrived, but is in its early days.

"With strong migration and the broad plateau for mortgage rates not set to drop materially for perhaps another year or so, it wouldn’t be a surprise to see a patchy year for both sales and prices in 2024."

"Even as interest deductibility gets phased back, it'll still be sticky for investors to sum up favourable returns when yields are low and mortgage rates high."

"First home buyers will still have good opportunities, since we don’t anticipate investor activity to return to peak levels. All borrower groups, however, will be keeping a close eye on the prospect of caps on debt to income ratios next year."

December Housing Chart Pack highlights:

• Residential real estate is worth $1.59 trillion.
• National property values saw a 0.7% rise in November, the second increase in this 'new phase' following October's 0.4% lift. The main centres are generally rising, but trends remain a little more erratic across other parts of the country.
• The number of property sales in November rose 19% compared to a year ago, the seventh consecutive monthly increase.
• There were 9,059 new listings over the four weeks ending 3rd December, down from 10,224 the same period last year.
• Total stock on the market is 36,498, nearly 12% below this time last year.
• First home buyers’ market share of 26% remains strong at a record high, with Auckland and Christchurch at 28% and 29%, respectively.
• Nationally rental growth hit 5.5% in November, remaining well above the long term average growth rate of 3.2%. The figure reflects higher wages, but also a tightening supply and demand balance, as migration soars in NZ.
• Gross rental yields nationally edged back up to 3.2% (from a trough of 2.6% for much of 2022), the highest level since late 2020.
• Around 54% of NZ’s existing mortgages by value are currently fixed but are due to reprice onto a new (generally higher) mortgage rate over the next 12 months.
• Inflation seems to have passed its peak and the Reserve Bank will wait to see the effects of the final 5.5% OCR for this tightening cycle. Mortgage rates are close to, or already at, their peak.

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