According to a property economist, while the housing downturn may be approaching its bottom, the recovery is likely to be hindered by high mortgage rates and affordability challenges. Recent data from CoreLogic, a property research firm, revealed that house prices in several suburbs have shown resilience by increasing in value over the past three months.
Out of the 128 suburbs that experienced growth, 71 saw a median value increase of at least 0.5 percent. Notably, the Kaipara District in Northland had two top-performing suburbs, Maungaturoto with a 4.7 percent increase and Kaiwaka with a 3.5 percent increase. However, house prices in 860 suburbs across the country declined over the past year, with 729 of them experiencing value decreases of at least 5 percent.
Kelvin Davidson, Chief Property Economist at CoreLogic NZ, commented on the situation. He mentioned that it appears the downward trend in housing prices could be nearing its end due to mortgage rates approaching their projected peak, sustained high levels of migration and employment, and relaxed credit regulations. Davidson stated, “The trend shows that house price declines have stabilized, providing cautious evidence that the downturn may be coming to a close. However, it depends on one’s perspective whether this is positive or negative. I still anticipate further declines and expect a relatively subdued market, given the constraints of stretched affordability and tight regulations on investors, which will limit growth and demand.”
Davidson predicted that more suburbs would witness an increase in house prices over the next six months. Nevertheless, he did not foresee a new price boom due to persistently high mortgage rates, stretched affordability, and the looming impact of debt-to-income ratio restrictions in early 2024.
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