New Zealand’s housing market is a “story of two islands”, one economist says – because the fortunes of sellers and home hunters within the South Island quickly diverge from these of their northern counterparts.
Actual Property Institute information on Monday added to this image.
Nationwide median costs had been up 0.4 % between January 2025 and final month to a median $753,106. Excluding Auckland, they had been up 1.4 % to $700,000.
However whereas Auckland and Wellington costs are nonetheless down 23.6 % and 26.9 % since their post-Covid peak, the West Coast hit a report excessive of $480,000, up 9.3 % year-on-year
Southland’s costs had been up 5.7 % year-on-year, Otago’s 6.7 % and Canterbury 3.4 %.
Solely Nelson was down, 8.9 %.
However within the North Island, solely Waikato, Hawkes Bay and Auckland had a raise in median gross sales costs in January in comparison with a 12 months earlier. The will increase had been 1.4 %, 2.4 % and 1.1 %, respectively.
Home worth index information exhibits Auckland costs are down 1 % a 12 months over 5 years, and Wellington is down 3 % a 12 months over the identical interval, however Christchurch is up 5.4 % a 12 months, Queenstown 8.1 % and Invercargill 5.2 %. Otago and Southland costs are additionally at new information.
BNZ chief economist Mike Jones mentioned it was a “story of two islands”.
“The North Island market, if you happen to put all these elements of the nation collectively, is working at fairly a unique tempo from the south.
“It is turning into increasingly more troublesome to even speak concerning the New Zealand housing market as an entity, as a result of it’s so divergent amongst these areas.”
He mentioned there was a sluggish shift south taking place as extra folks migrated inside New Zealand.
“Additionally you have bought the commodity money coming by way of, which is bolstering a few of these rural and regional incomes. That is a narrative that continues to play out. After which most likely the third one is simply an affordability dynamic as effectively, which is that every one of those markets, whether or not it is within the South Island notably, are cheaper relative to incomes and rents than the likes of Auckland and Wellington.”
He mentioned he may need anticipated the distinction to begin to slim however there was no signal of that but.
“I believe with these fundamentals nonetheless in place, folks nonetheless transferring south, regional economies performing comparatively higher, we’ll most likely see just a little bit extra divergence.
“The correction in nationwide home costs led to April 2023. Within the 33 months since, home costs have declined a further 1.4 % in Auckland and a further 3.2 % in Wellington. On the identical time, in Canterbury, Otago and Southland, they’ve gone up 17 % and 20 %… So it actually exhibits you the way divergent the market has been.”
Jones mentioned there had additionally been a extra aggressive provide response in Auckland, with extra constructing giving patrons extra selection.
“In case you take a look at listings per area, actually Auckland and Wellington stand out as being extra oversupplied … there are a couple of indicators of that dynamic slowing down.
“We’re truly getting building exercise begin to choose up once more, at the same time as inhabitants progress remains to be fairly low.”
Steve Goodey, a property funding coach, mentioned there was “no yield” for traders in Auckland for the time being. “I am advising shoppers to not go there for money stream if that is what they’re after.”
He mentioned there have been reductions available however not yield. “I like smaller city however not tiny ones.”
He mentioned he had invested lately in Invercargill, Whanganui and Hawera.
Areas like Tokoroa had been low cost however there was no prospect of worth rises, he mentioned. “Whereas money stream is what retains the car of your investing going, capital beneficial properties are what makes you rich over time.”
Kelvin Davidson, chief property economist at Cotality, mentioned his information confirmed gross sales exercise exterior the principle centres choosing up quickest.
He mentioned it was doubtless Auckland and Wellington might lag for some time.
“In case you take a look at home costs, we have a projection that we get a nationwide common rise this 12 months of 5 %. I ponder if that’s most likely going to be a bit under 5 % with the best way issues are going however as a spherical quantity, name it 5 %.
“It would not shock me if. say, Auckland and Wellington are under that quantity and Invercargill, Nelson, a few of these extra second-tier cities are a bit stronger. I might see that lasting for some time simply reflecting the form of the financial system for the time being.”
