New Zealand’s housing market saw a slight uptick in June, with median property values rising by 0.2 percent, reversing declines seen in the previous two months. Data from property research firm Cotality shows the national median value reached $815,389, but this modest gain comes amidst broader weakness, highlighting ongoing challenges for the sector.
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Key Takeaways:
- Median property values rose 0.2% in June, reaching $815,389.
- Prices remain over 16% below the January 2022 peak.
- Year-on-year, national values are still down 0.7%.
- Abundant listings and a weak job market continue to dampen buyer urgency.
- First-home buyers and smaller-scale investors are active.
- Weak market conditions are expected to continue through 2024, with modest growth forecast for 2025.
Analyzing the June Data and Market Context
The 0.2 percent rise in June provides a temporary pause in recent price dips but doesn’t signal a significant shift in market momentum. Despite this monthly increase, the national median property value is still substantially lower than its peak, down more than 16 percent from January 2022. Looking at the past year, values have decreased by 0.7 percent, reinforcing the picture of a market struggling to regain ground.
Kelvin Davidson, Chief Property Economist at Cotality, points to the high volume of properties listed for sale as a key factor. With plenty of options available, buyers feel less pressure to rush into decisions, giving them greater negotiation power.
Key Factors Influencing the Market
Beyond high inventory levels, the state of the job market is also weighing on property activity. Job losses directly impact potential buyers, while reduced job security for those still employed can make others hesitant to take on significant mortgage debt. These economic headwinds collectively contribute to cautious market sentiment.
Buyers not rushing due to high property listings
Who is Buying and Selling?
Amidst the subdued conditions, certain buyer segments are finding opportunities. First-home buyers continue to be active, likely taking advantage of less intense competition and potentially more favorable pricing compared to recent years. Investors are also gradually returning, though Davidson notes this is particularly true at the smaller end – those purchasing their first or second rental property rather than large portfolio expansions.
Regional Variations Across New Zealand
While the national picture shows marginal change, performance varies significantly by region:
- Tāmaki Makaurau Auckland: Down 1.0% annually to $1,079,747.
- Kirikiriroa Hamilton: Up 2.0% annually to $752,125.
- Tauranga: Down 1.1% annually to $915,657.
- Te-Whanganui-a-Tara Wellington: Down 5.0% annually to $797,457.
- Ōtautahi Christchurch: Up 2.5% annually to $678,364.
- Ōtepoti Dunedin: Down 0.4% annually to $614,656.
These figures show Hamilton and Christchurch performing stronger than the national average over the past year, while Wellington continues to see the most significant declines among the main centers listed.
Outlook and Influencing Factors
Cotality expects the current weak market conditions to persist throughout the remainder of 2024. Looking ahead, the forecast is for a modest recovery, with median values projected to lift by 2 to 3 percent over the 2025 calendar year.
The Reserve Bank’s Official Cash Rate (OCR) decisions, including an expected hold at the upcoming meeting, are not anticipated to have a dramatic immediate impact on the housing market. Similarly, the potential economic boost from existing mortgage holders repricing to lower fixed rates is uncertain. Some borrowers may use the savings to pay down debt faster or save, rather than increase spending or invest in property.
As Davidson summarizes, “for every upwards influence on the housing market at present, you can probably find a downwards factor.” This balancing act of opposing forces is likely to keep the market subdued in the near term.
What Does This Mean for Buyers and Sellers?
For buyers, the abundance of listings and subdued conditions continue to offer opportunities, particularly for first-home buyers. There is less urgency, allowing for careful consideration and negotiation. Sellers, on the other hand, may need to adjust expectations and be prepared for longer marketing periods. The market remains sensitive to economic shifts and changes in sentiment.
The modest June increase does not signal a breakout from the current holding pattern. Investors and homeowners should continue to monitor economic indicators and regional trends closely.
