The housing market is showing "increasing signs of life" across the motu despite low sales and challenging economic conditions, with residential property values lifting slightly for the third month in a row, according to the latest figures.
The new Quotable Value (QV) House Price Index, released on Tuesday, indicates the property market is increasingly showing signs of recovery, largely fuelled by first-home buyers in more affordable areas.
"We're also starting to see that recovery spread into our largest urban areas now, up the property ladder and into some of the higher value brackets. Though most people remain cautious - and rightfully so, given economic conditions - we are beginning to see that mindset shift a little," QV operations manager James Wilson said on Tuesday.
"Interest rates and credit constraints continue to act as a handbrake for the most part, but we are seeing increasing signs of life across much of the country.
"Interest in purchasing property has been on an upward trajectory post-election and as we head towards what is typically the peak selling season, with some purchasers looking to get in ahead of any perceived property price increases.
"A little bit of FOMO [fear of missing out] is setting in, with the number of new listings on the market not keeping up with demand. This is putting some upward pressure on prices."
The latest QV House Price Index shows the average home increased in value by 2.1 percent over the three months to the end of October - an improvement on the 0.9 percent quarterly home value increase reported at the end of September - with the national average now sitting at $907,387. It follows three consecutive months of modest growth, including by 0.9 percent last month.
Just three of the 16 main urban centres we monitor recorded average home value reductions this quarter: Whangarei (-0.4 percent), Hamilton (-0.2 percent) and New Plymouth (-2.8 percent), with New Zealand's largest cities experiencing some of the largest gains. The average home value increased by 2.7 percent in Auckland, 2.5 percent in Wellington and 1.8 percent in Christchurch.
However, Wilson reiterated that the housing market will likely remain "flat to gently rising" for the foreseeable future.
"I still don't expect to see a big rebound in house prices given the strength of the economic headwinds we're facing. But considering what we've all been through since COVID-19 first made its way to these shores, flat is probably the best thing given the current conditions," he added.
"It will be interesting to see whether some investors might become more active in the coming months, especially now that there's some certainty around a change in Government. This could increase the competitive pressure on house prices in more affordable areas and places where record migration is driving rapid population growth, but it's still unlikely we'll see a major return of investors while high interest rates and credit constraints remain."
How your region's housing market is performing, as per QV:
Home values increased across the wider Northland region by an average of 2 percent in the three months to the end of October, with Far North District (4.9 percent) and Kaipara (4.3 percent) leading the way.
However, home values continued to soften in Whangārei, where the average home value reduced by 0.4 percent to $724,514 - a marked improvement on the 1.8 percent average reduction recorded during the September quarter.
Auckland's residential property market is showing increasing signs of life.
The region's average home value increased by 2.7 percent throughout the October quarter - a slight increase on the 1.6 percent average increase recorded for the September quarter - to reach $1,276,739. That figure is still 4.7 percent lower than at the start of 2023 and 5.3 percent lower than the same time last year.
Just one of the Super City's seven former territorial authorities was in the red last month, with Rodney's average home value reducing by 0.2 percent during the month of October: but all recorded positive home value growth for the quarter.
Local QV registered valuer Hugh Robson commented: "The Auckland residential market has continued to gain momentum over the past four to five weeks. Agents report increased levels of enquiry from both investors and first-time buyers, with also existing property owners looking to upgrade to a better property making an increasing number of enquiries."
"The number of auctions has increased significantly as well, with agents reporting some very good results," Robson added. "The likely re-introduction of interest deductibility appears to be one reason for investors returning, with a significant increase in net migration into Auckland also helping to drive demand."
Tauranga's residential property market appears to be picking up.
The city's average home value increased 1.1 percent this quarter to $1,005,976, according to the latest QV House Price Index. That figure is 6.5 percent less than at the start of this calendar year, and 5.8 percent less than at the same time last year.
Local QV registered valuer Meghan Crowe said the market was showing some signs of property price recovery, with home values increasing locally by an average of 0.4 percent in October. "Real estate agents report no major increase in property interest here post the election, but they are predicting to see more interest over the coming summer months."
"Interest rates are still obviously higher than most people want them to be, but they've been this way for a while now, so buyers' expectations are becoming more realistic. In October, the Official Cash Rate was kept at 5.5 percent, so mortgage rates look to be at their peak or very close to it."
Residential property values have largely stabilised in Hamilton.
They reduced by an average of 0.2 percent throughout the three months to the end of October - down slightly on the 0.1 percent growth recorded in the September quarter - with the average home value now sitting at $775,822. That figure is almost precisely the same as it was six months ago.
QV property consultant Marshall Wu commented: "The market is recovering, albeit within the context of relatively low levels of purchasing activity. This suggests a subdued market sentiment overall and less-than-ideal conditions for real estate transactions."
"Even with the summer selling season on the horizon, it's unlikely we'll see a substantial uptick in purchasing activity. At least not until we see a major upswing in consumer sentiment, a reduction in interest rates or a loosening of credit constraints."
Meanwhile, the regional market also appears to have largely bottomed out, with the exceptions of South Waikato and Waitomo District, which saw average monthly decreases of 2.2 percent and 2.4 percent respectively in October.
Residential property values continue to fluctuate in Rotorua.
The latest QV figures show that home values have increased locally by an average of 1.4 percent throughout the last three months to the end of October, which is a marked improvement on the 0.3 percent average reduction recorded throughout the three months to the end of September.
The average home value in Rotorua is now $648,303, which is 4.9 percent less than it was 12 months ago and 3.4 percent lower than at the start of 2023.
Residential property values have yet to bottom out in New Plymouth.
The city's average home value went down another 2.8 percent in the October quarter, dropping to $697,447. The rate of reduction increased from 1.5 percent in the September quarter.
It's a stark contrast to neighbouring Stratford and South Taranaki, where home values increased by an average of 4.2 percent this quarter. However, values remain more than $200,000 lower on average in these districts than in New Plymouth.
The residential property market continues to slowly recover in Napier and Hastings.
The latest QV House Price Index shows home values increased by an average of 1.7 percent this quarter in the former and by an average of 2.4 percent in the latter. Both places experienced more growth this quarter than last.
QV Hawke's Bay manager Damian Hall commented: "The market in Hawke's Bay is still reasonably quiet but local agents are starting to see signs of improved activity and a little more confidence from purchasers. The typical spring flurry and recent election results have likely contributed towards this.
"The top end of the market has continued to hold its own with the influence of flood money payouts and plenty of cash still floating about. The first-home buyer market, up to about $625,000, is also performing well. Napier and Hastings have both seen positive growth over the past two months, whereas Wairoa and Central Hawkes Bay have been a little up and down."
Wairoa (-0.7 percent) was the only Hawke's Bay district to see a small decline in average home value this quarter, with values up 1.3 percent on average in Central Hawke's Bay.
The average home value in Palmerston North increased by 1.6 percent to $635,857 in the October quarter, after experiencing no growth throughout the three months to the end of September, and small reductions in July and August.
Local QV registered valuer Olivia Betts commented: "Sale prices in Palmerston North have levelled off over the last three months and now show a slight upward trend. Active agents in the market have indicated that this could be due to purchasers wanting to get in before investors.
"There is also a perception that some people have of trying to 'get a bargain' before house prices rise again, with increased confidence and stabilising interest rates," she added.
Wellington's residential property market continues to strengthen as we head towards summer.
The latest QV House Price Index shows the average home value increased by 2.5 percent across the greater Wellington region to $844,310 in the October quarter. It follows three consecutive months of positive growth.
Upper Hutt (-0.2) was the only local territorial authority to experience a small average decline during the month of October, with all local council areas experiencing net-positive home value growth throughout the three months to the end of October.
Local QV senior consultant David Cornford commented: "The market continued to strengthen in the Wellington region over October with another month of positive value growth recorded. Market activity has increased from the beginning of the year, with more active buyers and more properties coming to the market over the last few months.
"Well-presented and well-located homes are generally selling well. Due to the high number of recently completed townhouses and apartments, this segment of the market is not as strong as the market for stand-alone homes.
"The general sentiment is for values to rise modestly over the next 12 months. However, this growth will likely be dampened by economic headwinds, including continued high inflation, the cost of living crisis and rising unemployment."
Nelson's residential property values experienced a small rebound this quarter.
October marked the city's first positive quarter in 2023, with home values increasing by an average of 0.4 percent. The average home value is now $771,490, which is 4.4 percent lower than at the start of this calendar year and 4.9 percent less than the same time last year.
QV Nelson-Marlborough manager Craig Russell said home values had stabilised right across the top of the South Island this quarter, with Tasman and Marlborough also experiencing modest average home value growth of 0.1 percent and 0.7 percent respectively.
"The market typically enters a holding period over an election period, while buyers and sellers wait and see what will happen next. Now that election day has passed, activity appears to be picking up in Nelson with vendors and buyers having increased confidence to make decisions.
"We're now seeing what most would describe as a more typical housing market, with days to sell at historically normal levels. Agents indicate that a number of out-of-town buyers are now also active in the market."
West Coast property values have fared better than most so far in 2023.
As of the end of October, residential property values in Buller District and Westland are 3 percent and 0.6 percent higher respectively than they were at the start of the calendar year. In Grey District, they are down 2.1 percent on average, which is almost half as much as a national average decline of 4 percent.
On an annual basis, residential property values in Westland are on average 5.6 percent higher than at the same time last year. Values are also 4 percent and 3.8 percent higher on average in Buller and Grey District respectively.
The residential property market continues to recover in Canterbury.
Home values increased across the wider region by an average of 1.9 percent this quarter, with all bar two districts showing net positive growth throughout the three months to the end of October. There was no movement in Ashburton - up or down - and the average home value fell 6.2 percent in Waimate.
In Christchurch, the average home value increased by 1.8 percent this quarter to $740,129. That figure is 2.4 percent lower than the same point last year, and 1.5 percent less than at the start of 2023.
Local QV registered valuer Olivia Brownie commented: "This small amount of momentum in the property market appears to be further cementing the fact that we're well past the bottom of the market now. I expect we'll continue to see modest - if any - growth over the coming few months as we still have economic pressures limiting any significant price gains."
She said the wider Christchurch region had also experienced a modest amount of home value growth, with Waimakariri and Selwyn District recording average quarterly increases of 1.2 percent and 2.5 percent respectively.
Dunedin just posted its first positive quarter since the downturn began in late 2021.
The latest QV House Price Index shows residential property values increased in Dunedin by an average of 0.7 percent throughout the three months to the end of October. The city's average home value is now $614,389, which is 5.5 percent lower than the same time last year.
Local QV registered valuer Rebecca Johnston commented: "Real estate agents are reporting increases in open home attendance and multi-offer situations. The number of houses for sale on the market has also increased, but we're still seeing a tightening of supply versus demand overall. This is putting some upward pressure on prices."
Meanwhile, residential property values are also up across the wider Otago region this quarter - including Central Otago (0.9 percent), Clutha (0.6 percent) and Waitaki (0.5 percent).
"The upper quartile level remains strong in Waitaki. This could be due to the aging housing stock in Oamaru, increased competition and higher building costs for new builds. There are also not many quality vacant sections available in Oamaru," Johnston added.
Residential property values continue to slowly build in Queenstown.
The average home value increased by 1 percent to $1,731,858 in the October quarter, which is a fraction of a percentage point higher than last month's quarterly rate of home value growth.
The average home value is now 1.8 percent higher than the same time last year, compared to a 4.6 percent average annual home value decline nationally.
The QV House Price Index recorded another modest month of home value growth in Invercargill.
The average residential property value in Aotearoa's southernmost city increased by 0.4 percent in October to $469,812. That figure has now grown by 2.4 percent this quarter, but it remains 0.8 percent lower than the same time last year.
Local registered valuer Andrew Ronald said October marked the fourth month in a row that home values had increased on average in Invercargill.
"Values have stopped falling now and are beginning to strengthen, but there's still less demand overall than there was at the start of the downturn, with only a limited number of investors active in the market since interest rates increased and tax deductibility rules changed."