The national median house price is $811,662, Cotality NZ’s most recent data shows. Photo / Jason Oxenham
National house prices rose 0.2% in October, the second month of growth after five months of falls, with economists saying it could signal recovery in the market.
The national median house price is $811,662, Cotality NZ’s most recent data shows.
The chief property economist at Cotality, Kelvin Davidson, was measured in his outlook, saying the growth in October and September has been “reasonably small in the grand scheme of things”.
“It’s a cliche, but upturns obviously have to start somewhere, and the recent emergence of small increases in property values would certainly be consistent with the falls in mortgage rates over the past year or so.
“That being said, sentiment remains tilted to the cautious end of the spectrum, and of course, the economy and labour market are still subdued.”
Davidson said the Reserve Bank’s relaxation of the loan-to-value ratio lending restrictions, coming into effect on December 1, was a “notable shift” that could “possibly benefit investors a bit more than owner-occupiers”.
“Although the potential scope for more pre-approvals for low equity loans could bolster first home buyers,” he said.
“We’ve seen in the past that banks tend to act early on these rule changes, so the effects may start to show through even as soon as the release of October’s mortgage lending stats in late November.”
ASB chief economist Nick Tuffley also said October’s figures could be a good sign for the market ahead.
“The market is still pretty flat, but when you’re starting to see those tiny inches up in prices, it doesn’t add up to a lot, but it is a sign that things might be heading in the right direction.”
To pick up the market, Tuffley told the Herald, it would be “quite important” for sales turnover to increase to reduce the overall number of listings.
“That’s when you’re likely to see a bit more upward price pressure come through, because that’s one of the challenges for the market, there’s an awful lot of new listings pouring into the market all the time.”
Dunedin was the main centre to see the highest growth in prices over the month, with a 0.7% uplift. Christchurch had the second-highest growth rate, 0.4%. Wellington and Tauranga saw 0.2% growth, Hamilton saw none, and Auckland’s average prices dropped by 0.2%.
It takes the median house price in Auckland to $1,051,796.
And growth around Auckland itself has been patchy. Prices in Franklin grew by 0.3%, and on the North Shore by 0.1%.
Other submarkets across the city fell. Auckland City prices fell by 0.3%, while Rodney, Manukau and Papakura’s average prices dropped by 0.1%. Waitakere prices sank 0.7%.
Davidson said a “cautious mood is clearly pervading the property market” in Auckland.
“The stock of available listings across the Super City has eased downwards this year, potentially lessening buyers’ pricing power to a degree. But the new-build pipeline remains active.”
Davidson expected a lot of focus on what the Reserve Bank (RBNZ) decides at the next Official Cash Rate (OCR) decision on November 26.
He believes the RBNZ will likely cut the OCR by 25 basis points.
“This, however, could mark the end of the cuts in this cycle.
“If so, it’ll then be a case of judging how these effects are eventually filtering through to the economy, consumer spending, and the housing market.”
Given that mortgage rates have already fallen “a long way”, housing affordability is “more favourable” and the economy is “set to improve”, increases in property sales activity and house prices appear likely in 2026, Davidson said.
“However, would-be buyers may not necessarily need to be too concerned about falling behind. After all, with the stock of housing having risen in recent years relative to population, and debt-to-income ratio caps also now in action, only a modest rise in prices of perhaps 5% or less seems more likely than a fresh boom.
“Prospective buyers, whether that’s owner-occupiers or investors, will also no doubt be pleased that values remain around 17% below their early 2022 peak – with some likely to be viewing this as a strong opportunity to snap up ‘bargains’ at what might prove to be the low point for the market."
Tuffley said his team at ASB were also forecasting a 25 basis point cut to the OCR this month. He believed another cut was likely if the economy “doesn’t show much in the way of picking up” over summer.
Raphael Franks is an Auckland-based reporter who covers business, breaking news and local stories from Tāmaki Makaurau. He joined the Herald as a Te Rito cadet in 2022.
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