New Zealand’s residential property market is valued at NZD$1.66 trillion across 1.74 million dwellings, according to new data from Cotality, but the scale of the asset class is doing little to disguise a market still stuck in neutral.
National property values fell 1.3% in the year to September and are more than 18% below their previous peak, the data shows.
September recorded 6,519 property transactions nationally, down around 14% on the same month last year – the ninth consecutive annual decline in sales.
Cotality Chief Property Economist Kelvin Davidson said the figures needed context.
“Residential property remains an enormous part of New Zealand’s household wealth, which puts the significance of even relatively small shifts in the housing market into perspective,” Kelvin said.
“But scale shouldn’t be confused with momentum. The market itself remains subdued, with buyers and sellers still cautious, sales activity soft and property values continuing to edge lower.”
Conditions vary sharply by region. Auckland values fell 3.2% over the year to September, while Christchurch posted annual growth of 3.4%.
“There’s no single story across New Zealand at present,” Kelvin said.
“Some markets are proving more resilient while others remain under greater pressure, but nationally we’re still seeing a fairly subdued picture.”
High stock levels are continuing to hand buyers the upper hand on price.
“There’s still plenty of choice for buyers, which is giving them negotiating power,” he said.
“At the same time, most vendors aren’t in a position where they’re being forced to sell, and that’s helping to contain the rate of decline in property values.”
Cotality’s October chart pack shows first home buyers accounted for 29.5% of purchases in the September quarter – a new record, surpassing the previous high of 28.3% set the quarter before.
Movers, or relocating owner-occupiers, held less than a quarter of market share, while mortgaged multiple property owners sat at 22.9%, below their long-term average of 24-25%.
Mortgage costs are also turning against borrowers. One and two-year special fixed rates stood at 4.97% and 5.27% respectively in September, against an average rate of 4.80% currently being paid across the existing fixed mortgage book – meaning borrowers rolling onto new terms face a rate rise.
“For now, the market looks more like a period of consolidation than the beginning of another significant upswing,” Kelvin said.
“Housing remains an extraordinarily important store of New Zealand household wealth, but the conditions for renewed momentum aren’t yet firmly in place.”
Kelvin pointed to two dates that will shape sentiment in the weeks ahead.
“All eyes will be on the next OCR decision on Wednesday 28th and of course the election shortly after.
“Property investment remains challenging at present, but some would-be investors will be buoyed by Labour’s commitment to 100% interest deductions and now ACT’s proposal to remove tax ring-fencing for property losses.”