House prices fall in December, slow growth ahead - Real Estate Institute of New Zealand report 

The REINZ HPI was developed alongside the Reserve Bank and is widely considered the most reliable indicator of price movements in the housing market.
The REINZ HPI was developed alongside the Reserve Bank and is widely considered the most reliable indicator of price movements in the housing market. Photo credit: REINZ, Getty Images

House prices across New Zealand fell in December, finishing off a year of recovery on a weak note, according to the latest figures from the Real Estate Institute of New Zealand (REINZ).    

REINZ's New Zealand House Price Index (HPI) declined 1.1 percent overall from November to December.  The HPI measures sale price against a 'value' influenced by housing attributes, such as land area, floor area, number of bedrooms.   

The REINZ HPI was developed alongside the Reserve Bank and is widely considered the most reliable indicator of price movements in the housing market.   

The highest drop was in Auckland, where the HPI fell 2.3 percent from November to December.  

There were also declines in most major centres across the country, with a drop of 0.4 percent in Hamilton, 1 percent in Tauranga, 2.2 percent in Hastings, 0.8 percent in Wellington City, 0.3 percent in Nelson City, 1.1 percent in Christchurch, and 0.1 percent in Invercargill.    

Five regions posted HPI increases in December; Southland, Tasman/Nelson/Malborough/West Coast, Wellington, Taranaki, and Manawatu-Whanganui.     

The national median selling price in December was $779,830, down 1.9 percent from November.    

Outside of Auckland, the median price remained steady month-on-month, but some regions stood out.   Nelson's median price increased by 10.5 percent ($650,000 to $718,500) and Taranaki increased by 10.3 percent ($580,000 to $640,000) month-on-month.    

The HPI across New Zealand is still up 5.9 percent over the last five years, but 14.7 percent lower than its peak in November 2021.   

Annual median house price changes.
Annual median house price changes. Photo credit: REINZ

However, sales activity across the country is improving.   

REINZ CEO Jen Baird said, "we've been observing slow and steady improvement recently and we round out 2023 with continued improvement in sales activity in the market".   

While they remain relatively soft, residential property sales across the country were 5145 in December, an increase of 14.2 percent year-on-year, seasonally adjusted to an increase of 20.4 percent.    

This is still down 27 percent compared to December 2021 and down 46 percent compared to 2020 and Auckland had the lowest number of listings since records began in January 2007.    

Days to sell averaged 36 nationally, a drop of four days year-on-year.    

In their Economic Note on the REINZ data, ASB said, "things have picked up since this time last year, but the market has a way to go to build further momentum".   

Infometrics said, "a failure in sales volumes to recover from a particularly sharp decline in October around election time means that sales remain considerably below June to September levels".   

March is usually the busiest month of the year for sales activity so a better idea of the state of the market will reveal itself then.    

Infometrics said the loss of momentum in sales activity compared with earlier in 2023 could be due to "some post-election uncertainty still hanging over the market".   

They also pointed to higher interest rates as a contributing factor further subduing demand.   

The market is expected to recover at a faster pace once the new government's property market friendly policies come into play.   

"Part of the National government's 100-day plan includes repealing the Spatial Planning and Natural and Built Environment Act and introducing a fast-track consenting regime; sentiment may begin to improve in the market as these actions firm up and looser investor taxation is implemented," Infometrics said.   

In the longer-term, Infometrics predicts the housing market will move past this hump and "continue improving modestly into 2024," but affordability conditions which make it difficult to enter the market will limit the scope for rapid house price growth.   

Record high net migration and steady housing supply is balancing this.   

ASB predicts that Official Cash Rate cuts, which they predict will come in August, will give prospective buyers debt servicing relief.   

ASB agrees that the market is "past its lows, but this cycle’s recovery will be more gradual than we saw during the last upswing".   

Recent surveying from ASB shows housing confidence "continuing to improve, albeit from weak levels".