Home values fall again, but pace of decline slowing

The pace of decline in the value of the housing market has slowed, with a drop of 0.5 percent in October.

CoreLogic's Home Value Index dropped for the eighth month in a row, with values down 5.1 percent since February to $805,984.

Although the property market remained relatively sluggish in October, the pace of decline roughly halved in the past couple of months after an average fall of 0.9 percent from May to August.

"Rising sentiment may take some time to hit the 'hard data', but there's a sense that the end could be in sight for the recent downturn," CoreLogic chief property economist Kelvin Davidson said

"For property investors in particular the falls in mortgage rates are key, flowing directly through to better cashflow on a typical rental purchase - or in other words reduced losses - and smaller top-ups from other income. Increased interest deductibility supports that effect too."

Overall values were down 18 percent on the post-Covid cyclical peak but about 16 percent up on the March 2020 pre-Covid level.

Values in most of the main centres continued to decline with Wellington down 1.2 percent in October, Hamilton and Auckland down by 0.7 percent and Dunedin down 0.4 percent.

However, Tauranga was flat in October and Christchurch edged up by 0.2 percent.

"The latest fall in national home values suggests that even though mortgage rates have already dropped quite sharply, the influence of job losses and the wider feelings of reduced job security are playing the more important role at present," Davidson said, adding sentiment was echoed in the latest ANZ consumer confidence survey.

However, the slowing rate of decline indicated the market was approaching the floor for property values, he said.

"There has also been a change in the on-the-ground mood around Aotearoa NZ's wider property market in the past few weeks.

"That shift has been seen across a range of segments, from property valuers to individual investors, to developers and construction industry consultants."