CoreLogic’s Hedonic Home Value Index (HVI) showed that the national median property value fell another 0.5% in October, the eighth consecutive decline, meaning values are now down by a total of 5.1% since the “mini peak” in February. The level now sits at $805,984, only about $2,300 higher than the cyclical low reached in June 2023, when the previous sharp downturn was running out of steam.
To be fair, it is also worth noting that values are still around 16% higher than March 2020 (pre-COVID-19) levels. But they remain around 18% lower than the peak reached at the height of the post-Covid boom.
Regional variability in October results
Once again there was variability below the surface in October’s results, with the Wellington region as a whole falling by 1.2%, and Auckland and Hamilton by a further 0.7% each. Dunedin fell 0.4%, although Tauranga property values remained stable in October, and Christchurch actually rose slightly by 0.2%.
It’s not easy to prove categorically, but there are still many anecdotes circulating that Christchurch retains its ability to attract people from outside the region, attracted by both lifestyle and affordability factors. This is especially true if new residents coming from other parts of the country are able to keep their old jobs and work remotely to benefit from a higher salary based in Auckland or Wellington.
Reflecting the headwinds of falling mortgage rates and rampant job losses, property value trends in many provincial markets remained uneven in October. Nelson, Whanganui, Rotorua and Gisborne all increased slightly, while Queenstown remained stable. But value drops of 0.7 per cent or more were seen in Invercargill, Whangarei and Napier.
Labor Market Challenges Affecting Property Values
Taking a step back, the latest home value figures suggest that the housing market hasn’t quite turned a corner yet and, while mortgage rates have already fallen quite sharply, the influence of job losses and the wider sense of loss of job security are being felt. seems to play the most important role at present. In other words, the weak job market appears to be holding back the real estate market, even as financing becomes cheaper.
That said, it’s also worth noting that the pace of decline in national property values has been roughly halved over the past two months, following an average decline of around 0.9% from May to August. This could be a sign of an impending bottom for property values, especially considering an apparent change in the mood on the ground around the market in recent weeks. We’ve detected this shift across a range of segments, from real estate appraisers and individual investors to developers and construction industry consultants.
The impact of falling mortgage rates on real estate investors
For real estate investors in particular, lower mortgage rates are essential, as they directly translate into better cash flow on a typical rental purchase – or in other words reduced losses – and more add-ons. modest amounts from other income. Increased interest deductibility also supports this effect.
Real estate market outlook for the coming months
Looking ahead, it certainly wouldn’t be surprising to see the recent decline in property values come to an end over the next few months, but the chances of a sharp or sudden boom still seem relatively low, with prices being affordable still tense and abundant announcements. and jobs are lost. Debt-to-income restrictions may well become a more significant restraining factor over the next year as well.
If you want to dig deeper into how home values are changing in your area, CLICK HERE for the latest CoreLogic Home Price Index (HPI).
At The Mortgage Supply Co, we are here to guide you every step of the way, whether you are buying, selling or refinancing. Contact our team today to discuss your unique situation and how we can help you navigate an ever-changing real estate market!
