Residential property values are slowly buckling under the strain of the ongoing economic downturn, with just three of New Zealand’s main urban areas recording positive growth this quarter. 

The latest QV House Price Index shows values decreased nationally by an average of 1.9 per cent across Aotearoa throughout the three months to the end of July – a larger rate of reduction than the 0.9 per cent quarterly decline recorded back in June.

The average home is now worth $909,517, which is 2.3 per cent more than the same time last year and just 0.5 per cent higher than at the start of 2024.

Tauranga

The residential property market’s slow but steady decline has continued in Tauranga.

The QV House Price Index for July 2024 shows the city’s average home value reduced by 1 per cent to $1,019,271 this quarter – up slightly from a three-month average rolling rate of 1.3 per cent negative growth in our previous index. 

The city’s average home value is now 1.6 per cent lower than at the start of this calendar year, but still 2.5 per cent higher than at the end of July last year. 

Latest QV value map. Photo supplied.

Nationally

The largest average reductions in home value occurred across the top of the North Island this quarter – in Whangarei (-3.9 per cent) and Auckland (-3.4 per cent).

The latter has now recorded six consecutive months of negative growth, with the average home now worth 0.4 per cent less than at the same time last year.

Among New Zealand’s other largest cities, average values have also reduced for four straight months in Wellington and now in back to back months in Christchurch.

Just Marlborough (0.6 per cent), Invercargill (0.4 per cent), and Queenstown (0.3 per cent) recorded very modest amounts of positive home value growth this quarter.

Of these three, only the latter recorded slightly higher quarterly growth in the three months to the end of July than in the previous period.

“Residential property values are slowly shrinking across all price brackets, in almost every part of Aotearoa," says QV operations manager James Wilson.

“This is to be expected given the current challenging economic conditions, with a rising sense of job insecurity and persistently high interest rates leaving both buyers and sellers between a rock and a hard place. 

“We’re also seeing a pretty major imbalance between the number of properties available for sale on the market this winter and a shallow pool of buyers who are willing and able to make a purchase.

“This is helping to maintain downward pressure on prices overall, with sellers having to adjust their expectations, pull their listings, or play the waiting game until conditions eventually improve.”

However, James says there was some growing optimism that mortgage rate relief could be on the not-too-distant horizon.

“Homeowners are certainly feeling the strain right now, so they would have noted that the Reserve Bank’s rhetoric shifted somewhat in its last monetary policy review.

“They’ll be watching this week’s announcement with interest, if you’ll pardon the pun.”

He says prospective buyers will also be paying close attention to what the Reserve Bank has to say, with two more monetary reviews also scheduled later this year for October and November.

“Markets don’t tend to respond too well to uncertainty. So, when we do eventually get a firmer steer on when we can expect mortgage rate relief, it may signal a shift in sentiment, which could spark some life in certain parts of the property market – but it’s not expected to trigger a rush back to the races.”

In the meantime, he expected home values to remain flat to gently falling.

“Unemployment is on the rise, and we may see an uptick in mortgagee sales as a result of economic strife, but it’s still unlikely that we’ll see any strong value declines as we make our way through the rest of winter.

"It’s even less likely that we’ll see any sudden strong home value growth,” says James.