The CoreLogic Property Market & Economic Update Report is out, and we’ve focused on the fact that NZ’s residential property market ended 2018 with generally subdued activity levels in the face of reasonably consistent (albeit controlled) value growth across most of the country, with the exception of Auckland and Christchurch - where controlled flatness ruled. 

Our expectation is that the 2019 property market will see much of the same as 2018. Risks do remain, but we have a solid footing. We anticipate that property sales volumes in 2019 will be similar to 2018 (at 80,000-85,000 transactions), with average values probably rising by around that 3% figure again.

In this report, we take a quarterly review of macroeconomic and demographic indicators in the context of the property market, before providing national and main city summaries on housing metrics, with some visual heat-maps included too. You can download your free copy here:, but read on for a quick summary of key elements: 

Who’s buying? 
Sales activity at the end of 2018 remained fairly low. Within that slightly soft market, the CoreLogic Buyer Classification Data within the report shows that the key players were mortgaged multiple property owners (MPOs) and first home buyers (FHBs), with ‘movers’ less active.The share of purchases going to FHBs in Q4 2018 was 23%, slightly down from Q3’s figure of 24%, but still on a par with previous peaks in 2006-07. Mortgaged MPOs (i.e. investors with a mortgage) are also slowly regaining their presence in the market, after LVR III in October 2016 and the 40% deposit requirement that hit them hard. 

Key economic factors: 
GDP growth cooled in Q3 2018, ‘payback’ for the strength seen in Q2. Although the trend for GDP has slowed, growth is still decent and expected to stay at a respectable 2.5 - 3% for a while yet. In addition, although easing net migration will provide a headwind for property in 2019, the labour market remains very strong - providing a solid foundation for households to continue paying their mortgages, and for property sales volumes and values to hold up.

The interest rate environment looks likely to be supportive. Barring an offshore shock, the likelihood that NZ’s OCR will remain on hold at 1.75% until late 2020 bodes well for domestic mortgage interest rates, especially since banks are operating in such a competitive environment.

The recent loosening of the LVR rules will probably also help market activity to some degree, but the prospect that banks may need to hold more capital on their balance sheets in future will limit their willingness to lend significantly greater amounts of money.

Property values:
Property values are generally rising, other than continued sluggishness in Auckland affordability issues) and Christchurch (an even supply/demand balance). Average property values NZ-wide rose by 3.2% annually in December, the 15th consecutive month of growth between 3-4%. The level now stands at $682,938.”

Government Policy:
The impact of government policy in the property market will be a key theme for 2019, particularly in terms of how it affects investors and construction activity. Starting with investors, we don’t expect a mass exit from the sector, but the ring-fencing of rental property losses for tax relief (due April) and the longer-term potential for some form of capital gains tax will have negative effects on sentiment, and profits. Of course, property is still a trusted asset class and alternative options such as term deposits aren’t especially attractive at present. The Kiwibuild programme success will be important to boosting housing supply in NZ, especially if prefabrication starts to take on a greater role.