House prices stalled at the end of 2023, but a small amount of growth is expected in 2024.
The latest Quotable Value House Price Index shows home values increased across all of the main urban centres monitored but at very subdued levels.
The average home value increased nationally by 0.6% throughout the December quarter to $905,070, down from the 2.3% quarterly home value increase reported at the end of November.
Across the main centres, Rotorua (6%) and Tauranga (3.3%) recorded the most home value growth on average in the December quarter.
The largest cities also saw a small amount of growth Auckland (1.9%), Wellington (2.4%) and Christchurch (2.5%).
Meanwhile, New Plymouth (0.4%) recorded the smallest increase on average standards.
QV operations manager James Wilson said the latest data demonstrated how volatile value trends could be, given current market conditions.
“With relatively low sales volumes in many markets across the country, it doesn’t take much change in activity to change the overall value performance.”
While in October and November there was growing demand for property, things stalled in December, Wilson said.
The could be the result of people waiting for the summer months to list their properties, he said.
“January will be the tell in terms of what might be happening in the market,” he said.
“We do expect to see some listing activity. Whether or not that continues that value growth or things begin to settle a wee bit as supply of listings meets up with demand, that’s crystal ball gazing, but we do expect a bit of a flurry of activity coming into the January month.”
Wilson expected home values would continue to slowly strengthen over the next few months, then slow moving into the autumn.
“High net migration remains in place, increasing demand and putting pressure on the rental market, and the expected reintroduction of interest deductibility for property investors will also certainly impact the housing market.
“However, the biggest handbrake to home value growth right now is interest rates, which are expected to remain at current levels throughout much of 2024 as the Reserve Bank looks to reduce stubbornly high inflation levels.”
What are real estate agents seeing?
Rotorua, which saw the highest increase in value, still had a quiet December.
Professionals McDowell Real Estate principal Steve Lovegrove said October and November had seen a good turnover in the city, but December had been quieter than expected.
What the stats reflected could be different based on the mix of properties that were selling, Lovegrove said.
A common situation he had noticed in his region was that a lot of people needed their property to sell in order to buy, which could see a chain of people needing to sell before they could transact.
But most real estate agencies would be feeling positive about the year ahead, Lovegrove said.
“Not because it’s boom and not because we’ve got past the bust, but the fact that it will be normal. We’ll see normal transactions, we’ll see stability in prices.”
Bayleys Canterbury director Rachel Dovey said after a change in government last year, they had expected to see more confidence return to the market, but that had been slower to eventuate than expected.
December had also seen some hesitancy as people held out to the new year to list their properties.
But the new year was off to a positive start.
“As we’ve returned into the new year, we’re actually seeing high numbers of appraisals or submissions, people looking to go to the market, right across the board in all kind of price points. And we see that as quite a positive thing as we get into this new year phase.”
Sale prices in Canterbury had held steady compared to some other regions, Dovey said.
By Krystal Gibbens of rnz.co.nz