Spring brings little lift to NZ house prices

The latest QV House Price Index shows New Zealand home values fell an average of 1.5% in the three months to September. That eased only slightly from the 1.9% quarterly decline reported a month earlier. 

The average home is now worth $892,580, down 1.9% since the start of the year and 0.9% lower than a year ago, QV said on Monday. 

“There are some minor green shoots here and there – mostly in the South Island – but it’s still overwhelmingly one-way traffic, with buyers firmly in the driver’s seat,” said QV national spokesperson Simon Petersen. 

“Buyers remain wary, they’ve still got plenty of choice, and there’s very little sense of urgency given the wider economic and political context. Interest rates and the approaching election are giving people even more reason to take their time and negotiate hard,” he said. 

Most cities record falling values 

Only three of the main urban areas avoided a clear fall. Values were virtually static in Tauranga (+0.1%) and Invercargill (+0.5%), while Queenstown led with 3.1% growth to an average of $1,994,461. 

At the other end, values fell 3.2% in Gisborne, 3% in Wellington and Whangārei, and 2.5% across Auckland. 

South Island bucks the national trend 

A regional divide is evident. Average values rose across all of Southland and most of Otago this quarter, while Southland is 4.3% higher than at the start of the year. In the Wellington region, Porirua fell furthest, down 5.5% for the quarter and 7.4% on a year earlier. 

“The economic recovery remains uneven and we’re seeing that reflected in property values. There really isn’t one consistent housing market right now – it’s still a patchwork of pluses and minuses, although mostly minuses,” Petersen said. 

Election and rates extend wait-and-see mood 

Petersen said the general election on 7 November was another factor in the market’s wait-and-see mood, particularly among investors. 

“The election gives people another reason to pause if they’re already feeling uncertain – but it’s certainly not the only reason the market remains so weak in our main urban areas. Economic conditions, employment confidence, borrowing costs and the amount of property available for sale are all having an effect, as they have been for some time now.” 

What valuers are seeing on the ground 

QV’s regional valuers described similar conditions. In Auckland, registered valuer Hugh Robson said buyers were making low offers and homes were generally taking longer to sell. 

“People are waiting to see what happens with the election and interest rates. In the meantime, first-home buyers continue to make up a large share of the market, while investors and auction activity remain relatively quiet,” Robson said. 

In Hamilton, valuer Marshall Wu said investors remained cautious. “Investors remain cautious due to uncertainty surrounding interest rates, potential property tax changes and the upcoming general election,” he said. 

In Nelson and Marlborough, QV manager Craig Russell said entry-level housing remained the most sought after.  “Entry-level housing up to $800,000 remains most sought-after given first-home buyers are most active in the market right now,” he said. 

Petersen said spring should bring more listings and activity in the coming weeks, but not a change in direction. 

“Spring should bring more listings and activity over the coming weeks, but it won’t suddenly break the market out of its current holding pattern. More buyers won’t necessarily mean stronger prices,” he said. 

“Until buyers feel a greater need or confidence to act, vendors are still going to have to compete pretty hard for their attention.”