New Zealand Housing: A Two-Speed Market Signals a Prolonged Recovery
Auckland homeowners are facing a continued downturn, while Invercargill celebrates rising values. This stark contrast encapsulates the current state of New Zealand’s housing market – broadly flat, yet fractured. New figures from Quotable Value (QV) reveal a national average value of $902,020, unchanged year-on-year, but 13.9% below the peak of January 2022. But beneath the national average, a significant divergence is emerging, hinting at a recovery that will be anything but uniform.
Regional Resilience: The South Island Leads the Charge
The QV House Price Index for the quarter ending October 2023 paints a picture of regional strength, particularly in the South Island. Invercargill led the gains with a remarkable 2.7% increase, followed by Queenstown (1.4%) and Napier (1.2%). This isn’t simply a statistical anomaly. These areas benefit from robust local economies – Queenstown’s tourism sector and the Southland/Otago regions’ strong primary industries – coupled with relative affordability. As QV national spokesperson Andrea Rush notes, “Local economies remain steady…supported by tourism…and relative affordability.”
Why the South is Bucking the Trend
The South Island’s performance highlights a growing trend: people are increasingly seeking value and lifestyle outside of the major metropolitan areas. The pandemic accelerated this shift, and while the initial surge has subsided, the underlying desire for more space and a lower cost of living remains. This is particularly evident in Queenstown, where demand continues to outstrip supply, keeping values firm despite being the least affordable market in the country. This dynamic is explored further in Statistics New Zealand’s data on housing costs.
Auckland and Wellington: Still Finding Their Footing
While the South Island shines, Auckland continues to drag on the national average, experiencing a 2.2% decline. Wellington also saw a drop of 0.8%, though Rush suggests the capital is showing signs of stabilization. The larger declines in these centres reflect a combination of factors: higher initial valuations during the peak of the market, increased housing supply, and the impact of rising interest rates. However, the lifting of listings and buyer activity this spring, as reported by QV, offers a glimmer of hope, even if it hasn’t yet translated into sustained value growth.
The Christchurch Exception: A Steady Hand
Christchurch stands out as an anomaly among the main centres, maintaining relatively stable values near their previous peak. Rush points out that Christchurch didn’t experience the same dramatic price increases during the peak as other cities, suggesting a more sustainable market. This resilience could be attributed to a more diversified economy and a steady population growth, avoiding the boom-and-bust cycle seen elsewhere.
Looking Ahead: A Gradual Recovery, But With Caveats
QV anticipates relatively stable values in the near term, with gradual growth expected in 2026. This cautious optimism is tempered by ongoing economic uncertainties. While easing interest rates are improving sentiment, high living costs and unemployment continue to weigh on household confidence. The market is still “finding its footing,” and a full-scale recovery is unlikely to be swift or uniform.
The Role of Interest Rates and Lending Conditions
The trajectory of interest rates will be a key determinant of the housing market’s future. Further cuts, coupled with more relaxed lending conditions, could provide a much-needed boost to buyer confidence and demand. However, any unexpected economic shocks or a resurgence in inflation could quickly derail this progress. The interplay between monetary policy and economic conditions will be crucial to watch in the coming months.
The New Zealand housing market isn’t a monolith. It’s a complex ecosystem of regional variations, economic pressures, and shifting consumer preferences. Understanding these nuances is critical for anyone looking to buy, sell, or invest in property. What are your predictions for the regional variations in the New Zealand housing market over the next year? Share your thoughts in the comments below!
