Source: Radio New Zealand
Hamilton and Dunedin experienced a lift of 0.9 percent in the month while Auckland was up only 0.1 percent (file image). 123rf
Upturns have to start somewhere, and February could have been the beginning for the housing market, Cotality says.
It has released its latest data which shows property values lifted 0.2 percent in February, the strongest increase since October last year.
The national median value was $806,697, still 1.2 percent down on a year ago and 17.3 percent lower than the 2022 peak.
Hamilton and Dunedin experienced a lift of 0.9 percent in the month while Auckland was up only 0.1 percent. Wellington was up 0.4 percent and Christchurch 0.6 percent.
Over a year, Wellington was down 1.4 percent, Auckland down 3.2 percent and Christchurch up 2.8 percent.
Chief property economist Kelvin Davidson said the stronger results could be a sign of things to come but it was still early days.
With sales activity trending upwards for some time now, mortgage rates down, and the economy showing signs of a pick-up, a re-emergence of modest gains in property values this year would not be a surprise, he said.
“The labour market probably holds the key, and most forecasts suggest that employment has already troughed, with the unemployment rate set to fall from now on.
“That being said, a modest lift in national property values in a single month in February is nothing to get carried away about.”
He said there would need to be increases for two or three more months before it could be a trend.
“Upturns do start somewhere. And I guess with those underlying fundamentals, we’re sort of watching for that.
“It was the strongest rise we’ve seen for three or four months and I think probably the more notable thing is just the broad-based nature of it. We saw increases across all the main centres which hasn’t happened for quite some time.”
He said provincial areas were still strong thanks to healthy farming activity.
“That’s going to be providing some cash into those markets and some liquidity into those markets.”
Election impact
Davidson said the looming election could also have an effect.
“We know there’s going to be chat around capital gains tax. You could imagine discussion around interest deductibility. I think the election is probably looming fairly large for investors. We are seeing investors active in the market now but you wouldn’t necessarily be surprised if there’s a wee bit of a hiatus there as we get closer to the election as they weigh up what parties are saying and what it might mean in terms of tax bills.”
Conflict in the Middle East was not yet a factor.
“In the near term it would be slightly inflationary. Maybe in the medium term depending on how long it lasts it could be disinflationary in the sense that you get a slowing economy and that weighs on inflation. I think it depends on the time period you’re looking at, how long will this last?
“I don’t think the Reserve Bank will necessarily be rushing to do anything, just sort of sitting back and waiting to see how that all plays out.
“They have been pretty consistent in saying they think there’s spare capacity out there so that should eventually bring inflation back down potentially even with some sort of shock coming through from oil prices or shopping costs.”
He said more borrowers were choosing to fix for longer. About 30 percent of existing home loans were fixed and not due to reprice for at least a year, the highest share since February 2024.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
