- Christchurch house prices are nearing their post-Covid peak, just $4000 below the June 2022 high.
- Auckland and Wellington house prices are not expected to recover until 2028 and 2031, respectively.
- South Island markets, especially Queenstown-Lakes, show stronger growth compared to the North Island.
Christchurch house prices are close to returning to their post-Covid peak, new OneRoof figures show.
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The city's average property value rose by 1.4% in the three months to the end of May and is just $4000 shy of the record high of $802,000 it recorded in June 2022.
However, house prices in the country's other major metros may take much longer to recover the losses incurred by falls in 2022 and 2023.
Research by OneRoof and its data partner Valocity estimates Auckland house prices won't return to their post-Covid highs until late 2028, while Wellington homeowners will have to wait until 2031.
The forecasts follow a flattish set of results from the latest OneRoof-Valocity House Value Index.
The nationwide average property value grew by just 0.3% in the three months to the end of May to $969,000, while year-on-year growth was -0.5%.
The figures suggest housing markets in the South Island are in a better shape than those in the North Island.
Canterbury's average property value climbed 1.1% in the last three months to $797,000 - $1000 below its post-Covid peak.
Recovered from the slump entirely are Otago and the region's wealthiest district, Queenstown-Lakes, with both enjoying value growth of around 2% in the last three months. House prices in West Coast and Southland also hit new highs.
However, growth across much of the North Island has been minimal: Auckland's average property value dropped 0.2% in the three months to the end of May, Hamilton's rose by 0.4%, and Tauranga's and Wellington's slid 0.7%.
South Island markets, especially Queenstown-Lakes, are enjoying stronger house price growth compared to the North Island. Photo / Getty Images
The slowdown is good news for first-time buyers, who remain the biggest buyer group in the market.
They are also reaping the benefits of lower interest rates and a wide range of house-buying options (more than 40,000 homes were for sale on OneRoof at the end of May).
But for many homeowners, the figures suggest modest capital gain is on the cards for the next decade.
Return to peak
OneRoof and its data partner Valocity have analysed property values in each of the major metros since the end of the slump and identified the size of the gap between current values and those at market peak.
The research also determined when the values were likely to return to their peak in each city, assuming annual growth of 5.6%. This rate was chosen because it is the Treasury's forecast rate for house price growth for the year to June 2025, as outlined in the Budget’s Economic and Fiscal Update.
The estimates do not account for debt-to-income ratios, changes in interest rates and listing volumes, or the Budget's own prediction that price growth will ease to 5.3% by 2029.
They are simply rough guides to future house price movement and highlight the extent of the challenges facing homeowners in a flat market.
- New Zealand's average property value has climbed only 2.7% since the end of the slump in June 2023 and is 11.7% ($129,000) below its post-Covid high of $1.098m, recorded in February 2022. Estimated return to peak: June 2027.
- Auckland's average property value dipped below its June 2023 trough of $1.278m in September last year. Since then, it clawed its way back to $1.3m, but has eased in recent weeks, and is still 17.7% ($280,000) below its record high of $1.579m, recorded in January 2022. Estimated return to peak: December 2028.
- Christchurch's average property value dropped to a post-peak low of $739,000 in May 2023. In the two years since, it has grown almost 8% to $798,000 - 0.5% ($4000) below its high of $802,000, recorded in June 2022. Estimated return to peak: July 2025.
Homes in the popular Christchurch suburb of Fendalton, where the average property value is $1.78m. Photo / Peter Meecham
- Dunedin's average property value hit a trough of $647,000 in June 2023. It has grown 4% since then to $674,000 - 11% ($85,000) off its high of $759,000, recorded in February 2022. Estimated return to peak: July 2027.
- Hamilton's average property value hit a trough of $799,000 in May 2023. It has grown 2.8% since then to $822,000 - 12.9% ($121,000) off its high of $943,000, recorded in January 2022. Estimated return to peak: November 2027.
- Queenstown-Lakes largely escaped the slump, with its average property hitting a record high of $1.92m in February 2023 before dropping just 2.9% to $1.86m nine months later. Since then, it has grown 12.6%, reaching a new high of $2.099m in May this year.
- Tauranga's average property value, like Auckland's, has bounced around a bit since hitting a trough of $1.055m in July 2023. Its current value of $1.07m is just 1.4% up on that number, and 15.5% ($196,000) off its high of $1.267m, recorded in March 2022. Estimated return to peak: June 2028.
- Wellington City's average property value hit a trough of $970,000 in June 2023 and then climbed briefly above $1m before dropping again. It hit a new post-Covid low of $956,000 at the end of May and is 28.6% ($382,000) off its peak of $1.338m, recorded in March 2022. Estimated return to peak: July 2031.
What's driving the changes?
Wayne Shum, a senior research analyst at Valocity, examined the reasons why Christchurch and Queenstown-Lakes are performing better than the rest of the major metros. He said house prices in Christchurch were relatively lower than Auckland and Wellington, so while people had faced the same high interest rates as everywhere else, homeowners were not hurt as badly.
“Christchurch is definitely more affordable. During the boom, a lot of people in Auckland and Wellington thought, ‘In Christchurch, I'm buying a bigger house and a bigger section for less money.’ And job-wise, you're not being paid a lot less to be in Christchurch.
“Queenstown has entirely different drivers. People there are buying second and third homes - and it's high-end stuff.”
Queenstown also had a shortage of homes at all ends of the market, plus strong tourist demand for accommodation, so competition in both southern cities had remained steady.
Valocity senior research analyst Wayne Shum: "Christchurch is definitely more affordable." Photo / Fiona Goodall
Wellington house prices are not expected to recover until 2031. Photo / Getty Images
Auckland house prices had suffered from recent falls in net migration, Shum said. “That's deterred people from buying rentals because there are fewer potential tenants in the market. House prices are also still relatively high, so that's another deterrent."
Public sector cuts had hit Wellington hard. “Wellington is considered a government town, but the recent cuts have cast a pall over the city and the housing market there. Look at the number of cafes that have closed down because there are not enough people in town.”
Wellingtonians were also paying some of the highest rates in the country, Shum said.
Suburb winners and losers
The analysis found 139 suburbs where property values have hit a new high or are close to returning to their post-Covid peak. All but six were in the South Island.
Most of the Otago and Southland suburbs on the list have seen strong value growth in the last three months, with Riverton/Aparima enjoying the biggest percentage leap (+6%) and Arrowtown the biggest dollar leap ($124,000).
The five North Island suburbs on the list are Omaha and Point Wells, in Auckland; Marfell and Fitzroy, in New Plymouth; Mamaku, in Rotorua; Kaikohe, in the Far North; and Rainbow Point, in Taupo.
Of the 897 suburbs with 20 or more settled sales in the last 12 months, 457 recorded value growth over the quarter, and 361 were up year on year.
The biggest quarterly increase at the end of May was 6.7%, in Patea, in South Taranaki. Joining Patea at the top of the table are: Riverton/Aparima (+6%); Mataura (+5.4%); Opunake (+5.2%); and East Gore (+4.8%).
Wellington continues to dominate the list of falling suburbs, with Crofton Downs recording the biggest drop. Its average property value tumbled 7.4% over the last three months to $982,000. Wellington Central suffered the biggest annual drop - a plunge of 21.5% to $577,000.
The chill running through Wellington's housing market has seen property values in 11 suburbs in the city now lower than they were in May 2020, with Wellington Central and Oriental Bay suffering the steepest five-year drops (-20.8% and -9.5% respectively).
The biggest dollar gains over the last three months were in Arrowtown (+$124,000), Lake Hayes (+$104,000), and Langs Beach (+$73,000), while the biggest dollar drops over the same period were in Oriental Bay (-$99,000), Saint Heliers (-$79,000), and Crofton Downs (-$78,000).
- Additional reporting by Catherine Masters
