House Prices

Housing slump over

CoreLogic’s latest national House Price Index (HPI) shows the national downturn is officially over with a total peak to trough decline of about $138,000 or 13.2% from the record highs of late 2021.

Thursday, November 02nd 2023

Auckland was the hardest hit in the slump, with prices falling $$261,000 since the 2021 record prices.

However, at just short of $909,000 in October, average values are still almost 25% above the pre-Covid levels of March 2020.

After remaining flat in September, the HPI had its first rise in property values since March last year, up 0.4% in October and 0.1% higher over the past three months.

CoreLogic chief property economist, Kelvin Davidson says around the main centres, signs of the emerging upturn were pretty widespread in last month.

Values in Hamilton and Christchurch rose by more than 1%, Dunedin by 0.8%, and Wellington and Auckland also rise over the month. Tauranga was virtually flat, posting a minor drop of 0.1%.

“The key fundamentals for house prices have been looking stronger for a reasonable period. October’s data has brought that first increase at the national level, but it’s early days and there's still a lot of diversity in market conditions across the country,” Davidson says.

“Although a new government hasn't been formalised just yet, the shift in voting to the centre-right seems to have bolstered housing market confidence, despite mortgage rates edging higher again recently. We’ve also seen net migration rise to a new record high, which is boosting property demand.

“Another key factor in the housing market turnaround has been the continued strength of the labour market. While this week’s official data for quarter three may show a rise in the unemployment rate, it will be due almost entirely to a larger labour force, not job cuts. The resilience of employment has meant the vast majority of households have successfully managed to rejig their finances as they reprice from older, lower fixed rates, onto today's higher levels.”

He says the loosening of the CCCFA rules from May and slightly relaxed LVR settings from June have both also played a role, while at the same time, the flow of new listings remains low. As a result, there’s been a re-emergence of some degree of competitive price pressures, as buyers attempt to secure a property in a market where there’s a bit less choice.


Although the average property value across Auckland rose last month, the increase was not seen in all sub-markets. Papakura surged by 2.2%, while Rodney, North Shore, and Waitakere saw values lift by 0.5%, however Auckland City, Manukau, and Franklin all saw modest falls in values.

“This patchiness in property values by sub-region, even though wider market averages have started to turn around, could well remain a feature in the coming months, in Auckland and elsewhere too," Davidson says.

"Housing affordability is still stretched in many parts of New Zealand and ‘higher for longer’ mortgage rates won’t do anything to ease that pressure”.


Wellington is another key area where signs of growth have emerged, but there’s variability still in play too.

Porirua, for example, had average values rise by 2.3% last month, but Lower Hutt, Upper Hutt, and Wellington City were more stable, and Kapiti Coast dropped by 1.4%.

Regional House Price Index results

Other Main Urban Areas (ordered by annual growth)

Outside the main centres, the changes in property values last month were also relatively diverse, with Rotorua, Gisborne, Whangarei, and Hastings recording solid increases of almost 1% or higher, but Invercargill, New Plymouth, and Whanganui all recording falls of at least 1%.

Over the past three months, New Plymouth has dropped by almost 3%, whereas Hastings has increased by nearly that same amount.

Davidson says this illustrates the variability that is evident from region to region, and which might stay in play in the coming months.


While Davidson says it seems likely property values will continue to rise in the coming months, increases may not be seen in every month or location.

"This recovery could remain fairly subdued by past standards, given that housing affordability is still problematic, mortgage rates aren’t set to fall anytime soon, and that caps on debt-to-income ratios are still on the cards for next year.

“First home buyers have remained a strong presence in the market over the past 12-18 months, recently hitting record highs in terms of their percentage share of purchases.

“On the flipside, mortgaged multiple property owners, including investors, have been quieter than normal, especially the so-called mum and dad group, who may be looking to buy their first rental or already have a modest portfolio.”

However, Davidson the next six to 12 months could be interesting, with some investors looking to buy again, with a view to their tax bills being lower in the future.

That means first home buyers could have some new competitive headwinds on the horizon, he says.

But even with a smaller tax bill, low rental yields and high mortgage rates still make it tricky to get the sums to work on an investment purchase. As such, CoreLogic doesn’t anticipate a full-scale return by property investors.


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