Housing market sees 'upward momentum' as average property values rise for third month - CoreLogic

The housing market is slowly gaining momentum, with new figures showing average property values have increased by more than 2 percent over the past three months.

CoreLogic's national House Price Index (HPI) shows a 1 percent rise in property values in December, on top of 0.7 percent gain in November and a 0.4 percent increase in October.

The increased momentum was due to interest rates peaking, a supportive labour market and a change in sentiment following the election, CoreLogic NZ chief property economist Kelvin Davidson said.

December's increase was the strongest monthly gain in almost two years, since January 2022, bringing the average house value to $924,489.

"While pressures are turning around, there are still restraints as well, we have still got stretched affordability, there's still high mortgage rates even despite some of the small falls.

"I don't think it is going to be a straight line or a hugely strong recovery. I think 2024 could still be a little bit subdued but for now, there is that upward momentum."

The gains were widespread across the main centres, with Tauranga, Auckland, and Christchurch all registering increases of more than 1 percent in December.

Queenstown was the one region that bucked the trend as it defied the downturn, with values now almost 6 percent higher than a year ago, and average prices sitting at a new peak of about $1.77 million.

"It has been the most resilient of the well-known areas and there is just still strong demand there from wealthy buyers, whether that is local or out of town, and also with tourism coming back - seeing that strong desire for people to live and work there, which puts pressure on the housing stock."

In contrast, Gisborne showed a 2.5 percent monthly fall despite a 0.4 percent rise since September, with Napier also down in December.

"There are always certain markets from month to month that see small falls even amongst a rising trend so there is no real surprises there, the general momentum is certainly up."

Davidson said 2024 was likely to be "a bit patchy" with an underwhelming upturn compared to what had been seen in the past.

While property prices had fallen from the peak, he said house prices were still about 25 percent more expensive than they had been pre-Covid.

"Affordability is still a challenge, especially with mortgage rates where they are, even despite those small falls, it is still challenging for people."

National property values remain 3.3 percent below this time last year, and 11.4 percent lower than the peak from two years ago.