Auckland housing market finally ends 1.5-year downturn, analysts agree

Latest property data suggests the end of a 17-month downturn in Auckland. Photo / Brett Phibbs

Auckland’s house prices are once again rising as buyers face the prospect of a “powered-up property market” with experts agreeing new data shows a clear recovery after a one-and-a-half-year slump.

However, while rising house prices will be welcome news for some, it is also likely to make life harder for first-home buyers.

The CoreLogic house price index published today shows a 0.4 per cent increase in Auckland property values in September - the first growth since March 2022.

The report also found property values across New Zealand flatlined last month “most likely ending the 17-month downturn”. The fresh data has the average New Zealand house costing $905,445 and the average Auckland house $1,259,296.

It is the third report in a week from property analysts that concluded a recovery in national house prices - with residential sales holding onto gains first felt in August.

On Saturday, OneRoof’s October house price report found the first quarterly rise, by 0.8 per cent, in New Zealand property in 16 months.

Auckland’s average property value was up 1.6 per cent over the past three months to $1,302,000, OneRoof found.

“The trend lines suggest that not only is the downturn over in Auckland but that the revival is building towards a strong finish for the city this year,” OneRoof editor Owen Vaughan said.

“Buyers are facing a powered-up property market, with prices picking up pace in the last three months and competition in auction rooms at its strongest in almost two years.

“The number of Auckland suburbs enjoying quarterly value lifts has jumped from 81 to 149 in the space of a month, and it’s likely many will be up year on year in December and January.”

Barfoot and Thompson’s September house price data report, released yesterday, found the median Auckland house price increase for the second consecutive month.

The median Auckland house price was $987,000 in September. This is 3.4 per cent higher than July’s median price of $950,000.

Barfoot & Thompson managing director Peter Thompson said the data “underlines the downward price cycle has likely run its course”.

“With the general election almost behind us and the summer season ahead, we can now look forward to a return of the normal seasonal upturn that occurs post-September,” Thompson said.

“More property is listed, particularly higher-priced homes, and buyer interest returns. This in turn leads to an increase in sales numbers and more competitive bidding at auctions.”

In contrast to the house price growth in the OneRoof report, the CoreLogic data found a slight dip in house prices nationally (-0.6 per cent) and in Auckland (-0.5 per cent) over the last quarter.

CoreLogic NZ chief property economist Kelvin Davidson. Photo / Peter Meecham

But such a small drop in house prices over the last quarter, when seen within the context of the 7.3 per cent drop nationally over the past year, revealed a stabilisation in the market.

“It was only a matter of time until property values found their floor and then started to rise again, and it’s this emerging growth we’re starting to see in the data, although there’s quite a bit of diversity across the country,” CoreLogic NZ chief property economist Kelvin Davidson said.

“Housing market confidence seems to have turned a corner, supported by a rough peak for mortgage rates, high net migration flows, a still-solid labour market, and an easing in credit conditions.”

However, the signs of a turning point for house prices in Auckland (0.4 per cent), Christchurch (0.2 per cent), Dunedin (0.2 per cent) and Wellington (0 per cent) in September were not replicated in Tauranga (-1.2 per cent) and Hamilton (-1.5 per cent) in the CoreLogic data out today.

From March 2022′s peak, CoreLogic found the total national house price fall has been 13.2 per cent, although average values remain 24.3 per cent higher than “pre-Covid” in March 2020.

The OneRoof quarterly data out on Saturday found average house price increases in Auckland (1.6 per cent to $1,302,000), Bay of Plenty (1 per cent to $956,000), Wellington (0.9 per cent to $864,00), Hawke’s Bay (1.7 per cent to $792,000) and Canterbury (2.1 per cent to $763,000).

OneRoof found average house price decreases in Northland (-3.1 per cent to $818,000), Waikato (-0.6 per cent to $890,000) and Otago (-0.4 per cent to $916,000).

Vaughan said the housing market right now was being driven by low listings volumes and a sense that price falls are over.

“The big question is whether this revival will last? Agents have reported they expect to see more listings come onstream after the election but pent-up demand is likely to soak up an extra stock in November and December,” Vaughan said.

“Interest rates are the big unknown, although most of the major banks expect one more hike in the OCR before the end of the year. That’s a problem, though, for those refixing their mortgage, with first home buyers appearing to accept 7 per cent-plus rates as the new norm for now.”

Jose George. General Manager, Canstar NZ. NZH 21Oct20 -

Consumer data research company Canstar’s general manager, Jose George, said that while rising house prices might indicate the New Zealand economy is turning it also made life harder for Kiwis hoping to buy their first home.

Canstar analysis of the latest OneRoof house price data showed it would take 13 years and four months for a typical resident to save a 20 per cent deposit for the average Auckland house costing $1,302,000.

“It’s incredibly difficult to raise a deposit, and the high-interest rate environment means anyone who gets on the property ladder then faces significant mortgage servicing costs,” George said.

“In an environment like this the best thing to do is shop around, speak to different providers, and take advantage of incentives like cashbacks, first home buyer special rates or combo deals.”

Spokesman for advocacy group Renters United, Geordie Rogers, said both major political parties were comfortable with house prices rising, and this created a huge issue for anyone not already in the market.

“I think what’s really evident for the communities that I speak to that aren’t in the housing market is that housing is critically unaffordable and even if house prices stayed where they were, it would take decades for it to get to an affordable point,” Rogers said.

“The affordable metric of median house price to median salary is three-to-one. In New Zealand that is between seven and nine-to-one. So we really do have to have the upfront conversation about can we have a truly just housing system where house prices only ever rise or stay the same?

“For people who are in housing who have mortgages that are higher than what it cost to buy their house, that does suck. It’s a horrible situation to be in but they will still have a house at the end of it.”

Tom Dillane is an Auckland-based journalist covering local government and crime as well as sports investigations. He joined the Herald in 2018 and is Deputy Head of News.