Photo: RNZ
New Zealand's housing market has turned a corner, but not everyone will be happy about it, property research firm CoreLogic says.
Its latest data shows property values lifted 0.5 percent in March after a 0.4 percent increase in February and a flat January.
Chief property economist Kelvin Davidson said it confirmed that the market was now in its "next phase of growth", prompted by lower interest rates and the improved affordability of housing since prices had fallen.
The March rise was the biggest increase since January last year, and took values to an average of $812,195.
Values are still down 16.3 percent compared to their peak in January 2022.
Dunedin prices were marginally down in March and Tauranga's were flat but Wellington's were up 0.3 percent, Auckland's by 0.6 percent, Christchurch's by 0.8 percent and Hamilton's 0.9 percent.
"The falls in mortgage rates since around July or August last year were always going to take a little bit of time to flow through to house prices, given the weak economic environment and subdued household confidence," Davidson said.
"The abundance of listings has been an extra limiting factor for property values, while some households on higher fixed interest rates from a year or two ago have also had to be patient before seeing their debt repayments drop.
"But the lags have now worked their way through the system and, with signs becoming clearer that the economy has started to turn a corner, confidence is returning to the property market."
For Sale Sign Photo: RNZ / Angus Dreaver
Data confirms talk of a pickup
He said, talking to brokers, valuers and real estate agents in recent months had provided anecdotal evidence that the housing market was turning around, and this was now feeding through into data.
"We're seeing a couple of months of consistent growth in house prices, not only at the national level but most areas too. It adds up to growth that's fairly broad-based.
"That said, a fresh boom in house prices seems unlikely, given additional restraints that are now in place, such as caps on debt-to-income ratios for mortgage lending."
Prices lifted across nearly all of the key provincial markets, with only Nelson recording a 0.1 percent fall in values. New Plymouth and Invercargill were flat, while Napier, Palmerston North, and Queenstown lifted 0.1 percent.
But Whangārei and Rotorua were up by 0.5 percent and Whanganui topped the charts for these areas with an increase of 0.8 percent in March.
Davidson said values were likely to remain patchy month to month.
"Even in an upturn it's never one-way traffic. It's not like every part of the country moves at the same pace. Even in a so-called boom there's aways 50 percent above the average and 50 percent below.
"In recent years some parts of the country have hardly fallen at all and now some parts of the country will grow more strongly than others."
He said buyers still had the upper hand when it comes to negotiating on price, benefiting from the elevated number of listings that persists across the market.
But prices were still likely to rise this year by about 5 percent or potentially a bit more.
"In the context of past upturns and given that we're still down around 16 percent from the post-Covid peak, the expected growth in values this year is fairly modest.
"If we're right the upturn is not that fast, some people might be disappointed by that - there's a perception that rising house prices equals good.
"But there always two sides to the market. Others will be pleased to see a more subdued upturn because house prices won't get out of reach so quickly. As an economy it's not the worst thing if we have a period of flatter house prices.
"As a country we don't get materially wealthier by trading houses amongst ourselves."
