Latest housing figures show a soft start to the New Zealand housing market in the March quarter.

CoreLogic's House Price Index rose 0.5 per cent in March, similar to January and February's muted gains, taking values 1.1 per cent higher over the first quarter of 2024.

The average property value across NZ now stands at $934,806, up 3.2 per cent ($29,361) from September's trough, but still 10.4 per cent (-$108,455) below the recent peak.

The inconsistent nature of the upturn so far was evident again through March, with Wellington rising strongly (0.9 per cent), and Christchurch, Dunedin and Auckland also showing gains (0.4-0.6 per cent), but both Tauranga and Hamilton edging down 0.2 per cent.

CoreLogic NZ Chief Property Economist, Kelvin Davidson, says the run of three softer results in a row at the national level was expected given stretched housing affordability.

"NZ's housing market can probably be described as 'not too hot, not too cold'.

"High mortgage rates remain a big challenge at the forefront of all borrowers’ minds, whether they’re taking out a new loan or repricing an existing mortgage.

"While the new tax year and 80 per cent mortgage interest deductions will help cashflow for property investors, it's unlikely to be enough to trump high interest rates.

“In addition, while the first official cash rate cut in the next cycle is getting closer, it’s certainly not here yet. Indeed, if the Reserve Bank’s current projections prove to be correct, the cash rate may not start to fall until next year, highlighting that shorter-term fixed mortgage rates may not drop much for at least another six to nine months.

“We’ve also seen a turnaround for listings activity in the first few months of 2024, with a good flow of fresh properties hitting the market, raising the choice for buyers and taking a bit of heat out of property prices. There’s no set definition, but the general sense is that the so-called sellers’ market of late 2023 has now switched back in favour of credit-approved purchasers."

Market performance was pretty variable across Auckland in March, with Rodney and North Shore both up by around 2 per cent, but then a large gap back to broad stability in Auckland City, Waitakere, and Franklin, while values in Papakura and Manukau declined over the month.

There's also been inconsistent growth over the March quarter, with Rodney up more than 2 per cent, but areas such as Waitakere only up very slightly (0.2%) and Papakura fractionally lower (-0.1 per cent).

"Auckland's market is often seen as a bellwether for national trends, and although I'm a little sceptical of the degree to which patterns in our largest city genuinely 'filter out' to the regions, there's no doubt Auckland is currently demonstrating what's being seen elsewhere – an 'up and down' recovery."

Indeed, digging beneath the surface in Wellington too, there's also clear evidence of variable performance.

Upper Hutt, for example, spiked 2.3 per cent in March, with Kapiti Coast and Wellington City also posting solid growth. However Lower Hutt and Porirua both saw values slide backwards.

"It's interesting to note the falls from the peak remain pretty large in Wellington, even after recent growth. Take Lower and Upper Hutt as examples, where values are still down from the peak by around 20 per cent in both areas.

"That decline probably isn't doing much for the moods of homeowners who purchased at the tail-end of the boom, but on the flipside, it may present a good opportunity for prospective new buyers."

Regional House Price Index results

Outside the main centres, March's data was also a mixed bag, with Invercargill, New Plymouth, Napier, and Rotorua all rising by at least 1 per cent, but Gisborne and Queenstown dropping 1.2 per cent apiece.

Given the broad (albeit slow) upturn has now been in progress for around six months, a number of regional markets have seen their annual house price growth rates turn positive.

Hastings, Invercargill, and Queenstown have seen annual gains of around 3 per cent or more, however Gisborne, Whangarei, and Nelson are still around 2 per cent (or more) below the levels from a year ago.

Davidson says there's always local variation in house price trends, even when the wider market nationally is booming.

"It's no surprise that some regions are rising more strongly than others in this current 'testing' market, while some are still actually falling. The general trend should remain upwards in the coming months, but it's unlikely to be a straight line everywhere."

Property market outlook

Looking ahead, Davidson says there are certainly still challenges in play for the housing market.

"March’s subdued property value data is a timely reminder that this upturn may well be inconsistent from month to month, and across regions.

"Certainly, although house sales volumes are now trending higher, they’re coming off a very low base, and activity remains well below normal. In that environment, it’s no surprise that value patterns are also a bit patchy.

"First home buyers continue to target the market, and have been a great success story in the past 12-18 months, using KiwiSaver for at least part of the deposit, and making full use of the low deposit lending allowances at the banks. But other buyer groups, such as mortgaged investors, remain more subdued.

“Sales volumes remain on track to rise by about 10 per cent this calendar year and property values by perhaps 5 per cent nationally – decent figures, but slow by past standards."