Falling house prices, growing supply and rising interest rates: three forces put this spring's property market to the test
ANZ today announced increases to its fixed mortgage rates. Following Westpac's earlier move, the market widely expects other major banks may follow suit.
ANZ today announced increases to its fixed mortgage rates. Following Westpac's earlier move, the market widely expects other major banks may follow suit.
This is unwelcome news for prospective homebuyers. With house prices nationwide still easing over recent months and new housing supply continuing to grow, many had hoped this spring would offer a better opportunity to enter the market. Now, rising borrowing costs have added another variable.
Taken together, several important sets of data released in recent weeks reveal new changes in New Zealand's property market: house prices are still adjusting, new homes continue to be added, and borrowing is becoming more expensive. These three forces are jointly shaping the direction of this spring's housing market.
House prices continue to fall as market performances diverge
The latest figures from OneRoof and Valocity show that, at the end of July, the nationwide average property value had fallen 0.7% over the previous three months. Around two-thirds of suburbs nationwide with sufficient sales volumes recorded price declines.
Auckland remains under considerable pressure, with average house prices falling further from three months earlier. The North Shore and Auckland's central urban area recorded some of the largest declines. Some higher-priced suburbs that had previously been relatively stable, such as Omaha, Stonefields and Point Chevalier, also saw price falls of tens of thousands of New Zealand dollars.
Wellington's market has shown no clear improvement either. Many owners who bought near the peak between 2021 and 2022 still have properties worth more than NZ$300,000 less than their peak value.
By contrast, Queenstown-Lakes continues to grow and remains one of the country's strongest-performing markets, although its rate of growth has begun to slow.
This shows that New Zealand's housing market no longer moves up or down in unison as it once did. Performance is increasingly diverging between regions.
New housing supply reaches a nearly four-year high
Even as house prices adjust, new home construction has accelerated noticeably.
Stats NZ figures show that 40581 homes were consented nationwide in the year to the end of June this year, up 19.4% from a year earlier and the highest level in nearly four years. In the second quarter alone, 10964 homes were consented, an increase of more than thirty per cent on the same period last year.
Auckland remains the most active region for residential construction, with more than 17000 new homes consented over the year. Canterbury recorded growth of 33%, while Queenstown-Lakes consented more than 2000 homes.
More residential building consents do not mean these homes will immediately come onto the market, but they do signal a continuing flow of supply over the coming years.
For buyers, this means more choice; for sellers, it means fiercer competition than before.
Mortgage rates are rising again
Just as many buyers were waiting to enter the market, another change emerged in mortgage lending.
After Westpac raised its fixed mortgage rates, ANZ also announced increases for fixed terms ranging from 6 months to 3 years, with its one-year fixed rate rising to 4.99%.
This round of adjustments reflects rising bank funding costs more than renewed heat in the property market. International funding costs and swap rates have remained elevated recently, prompting banks to readjust mortgage and term deposit rates. The market widely expects other major banks may follow suit.
For homebuyers, this means that although house prices have eased, borrowing costs have not fallen alongside them. Actual affordability may therefore be improving more slowly than expected.
A key test for the spring housing market
Spring has traditionally been the busiest period for New Zealand's property market, but this year is different.
More properties on the market give buyers greater choice, while falling prices create more room for first-home buyers to negotiate. Yet renewed increases in mortgage rates are prompting many to keep waiting.
Meanwhile, cost-of-living pressures persist, and the approaching general election adds to market uncertainty.
Together, these factors make this spring's housing market a test of confidence, rather than simply a matter of whether prices rise or fall.
Over the coming months, whether sales volumes recover will deserve more attention than house prices themselves. After all, a truly recovering market needs not only stabilising prices, but also buyers willing to return.
For now, New Zealand's property market appears to be entering a new phase. House prices, supply and financing costs are no longer changing in isolation; together, they are determining the market's future direction.