New Zealand house values fall again in July as the downturn becomes the longest in decades

New Zealand house values fell again in July, and the property data firm behind the numbers says the slump the market has been stuck in is now the longest and deepest in at least three or four decades.

Cotality’s Home Value Index for July, released on Saturday, put the national median value at $804,303, a fall of 0.3 percent for the month. That followed a drop of the same size in June. Values were down 1.0 percent over three months and 0.7 percent lower than a year ago.

The market now sits 17.7 percent below its January 2022 peak, although it remains 16.0 percent above where it was in March 2020, just before the pandemic reshaped the country’s borrowing costs and its housing demand.

Cotality chief property economist Kelvin Davidson said July simply extended the pattern of the first half of the year.

“Property sales volumes have inched lower so far this year, although they’re still at a relatively normal level. But the stock of listings remains elevated and this is giving buyers the balance of power when it comes to pricing,” he said.

“It’s therefore no surprise that values generally remain sluggish. The major downturn actually happened back in 2022 and 2023. But it’s been a soggy picture ever since and there’s certainly little sign of any meaningful upturn on the horizon yet.”

Across the main centres, only two moved up. Dunedin edged 0.2 percent higher in July and Christchurch lifted 0.1 percent. Hamilton dipped 0.2 percent, Wellington fell 0.5 percent, Auckland was down 0.6 percent and Tauranga slid 0.7 percent.

Auckland’s fall was unusually even across the region. Rodney and Papakura came off lightest with drops of 0.2 percent and Franklin fell 0.3 percent, but the other four main areas all recorded an identical 0.6 percent decline. Measured from the peak, the damage in parts of the city is severe. Auckland City, Manukau and Waitakere have each shed 25 percent or more of their value, while the North Shore is down 19.8 percent.

Davidson said the reasons were as much about mood as mortgages. “The super-city seems to be lacking a bit of economic confidence right now, which will be weighing on housing activity and prices,” he said. “But the pipeline of new housing supply is still relatively large, especially for townhouses, and this is also generally dampening property values. While this won’t be welcomed by existing property owners or vendors, it’s good news for first home buyers, who remain active across Auckland.”

Wellington was weaker still. Every part of the region except Porirua fell in July, and Porirua only managed to hold flat. Wellington City itself has dropped 3.1 percent in the past three months alone. From their peaks, values across the region are down between 22.4 percent on the Kapiti Coast and 27.5 percent in Lower Hutt, which is a quarter of a house wiped off the books for anyone who bought at the top.

The exception to all of this is the deep south. Invercargill rose 1.2 percent in July and is up 8.2 percent over the past year, the strongest gain of any district or city in the country. Its median value of $565,397 is an all time high, and it is one of only four places in New Zealand currently at a record, alongside Gore, Mackenzie and Hurunui.

What those four have in common is not population growth or a construction boom. It is farming and tourism income. “Each of those areas tends to be strong in either farming or tourism, or both, and with these sectors of the economy faring well, it’s no surprise that there’s been some degree of spillover into the property market,” Davidson said. “They’re not seeing a spike in prices. But there is more resilience than many other areas.”

Elsewhere outside the main centres the picture was patchy. New Plymouth edged up 0.2 percent and Rotorua 0.1 percent, Whangarei was flat, while Whanganui, Hastings, Nelson and even Queenstown all fell at least 0.3 percent. Gisborne dropped 0.9 percent.

First home buyers have been taking a record share of sales through this stretch, but Davidson told RNZ that even they are turning cautious despite what should be ideal conditions. “They’re seeing flat rents, rising costs in terms of rates and insurance,” he said. “I think they’ve also got a pretty clear eye now on the election around what might happen and in terms of the result.”

Investors are the group pulling back hardest. Davidson said a change of government looked likely to bring a capital gains tax, and there was an open question over whether interest deductibility would be phased out again and by how much. For landlords already squeezed by flat rents and rising outgoings, the prospect of future capital gains is, in his words, “all a bit academic” if the property cannot be afforded in the meantime.

Nor is cheaper money on the way in the short term. Davidson said the Reserve Bank was balancing medium term inflation against the risk of undermining a fragile economy, and that while mortgage rates had barely moved in recent weeks, “the likelihood is that some rises are on the cards again in the short term”.

His broader point is that something more durable than a slow patch may be under way. With housing supply now more responsive and tax settings possibly about to change, Davidson said households’ expectations of future capital gains could be moderating. “This may not have an overnight effect. But it could mean a slower and more drawn out upturn than we’ve seen in the past.”

Values will rise again eventually, he said, driven by population and wage growth, but that is probably a story for next year. In the meantime the standoff continues, with sellers refusing to capitulate and buyers in no rush. “Yes, buyers have the power, but it’s not all the power,” Davidson said. “Vendors don’t have to sell at any price.”

Are you waiting for prices to fall further, or has the wait already gone on too long? Tell us what you are seeing in your part of the country in the comments below.

This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂