Recent data reveals property values rose by 0.5 per cent in March, following smaller gains in preceding months. Declining interest rates and improved affordability have driven this increase.
Despite the recent upturn, average property values remain significantly lower than their peak in early 2022. While cities like Wellington, Auckland, Christchurch, and Hamilton experienced moderate growth, Dunedin saw a slight decline, and Tauranga’s values remained unchanged.
Falling mortgage rates since mid-2023 played a key role in the market’s resurgence. An oversupply of property listings has also tempered price growth. Many homeowners who locked in higher mortgage rates in previous years have had to wait before seeing their debt repayments decrease. However, buyer confidence is improving as economic conditions stabilise.
Insights from real estate professionals indicate that this shift has been underway for some time, with recent data confirming the upward trend. The consistency of price growth across most regions suggests a broad-based recovery. Experts believe a rapid surge in house prices is unlikely due to regulatory constraints, including new limits on mortgage lending.
Housing values increased across most major provincial markets, with only Nelson experiencing a slight decline. Some areas, such as New Plymouth and Invercargill showed little movement. However, some others, including Whangārei and Rotorua, recorded moderate gains. Whanganui saw the highest regional growth, with prices rising by 0.8 per cent in March.
Fluctuations in property values are expected even with this positive shift. The pace of growth will vary between regions, as seen in previous market cycles. Some areas that experienced smaller price drops over recent years may now see stronger recoveries. Others will take longer to gain momentum.
Despite rising prices, buyers continue to have the upper hand in negotiations because of an abundance of listings. This means that while prices increase, the market remains favourable for buyers. Experts predict house values will rise by around 5 per cent over the year, though this remains modest compared to past growth cycles.
Some may view this slower recovery as disappointing, given the common perception that rising house prices are always beneficial. However, a more controlled increase in values prevents homes from quickly becoming unaffordable, offering stability to both buyers and the broader economy. A period of steady price growth, rather than another housing boom, may prove to be a positive outcome for New Zealand’s economic health.
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