Chief property economist Kelvin Davidson says property values will remain sluggish for now, but conditions may be turning towards more growth in prices next year. Photo: RNZ / Nate McKinnon
House prices are generally flat, but values are starting to pick up in some of the cheaper parts of the country, Cotality says.
The property research firm - formerly Corelogic - has released data showing the performance of suburbs around the country.
Over the three months to September, 56 percent of suburbs recorded falls in house prices.
But about 40 percent of these had falls of less than 1 percent.
In total, 33 percent of suburbs had house values drop at least 1 percent and 44 percent had values rise or remain flat.
Some areas had house price rises of more than 5 percent, including Cobden, in Grey District, Springs Junction, in Buller and Alton in South Taranaki.
Declines of nearly 4 percent were recorded in Takapuna and Clevedon, in Auckland.
Chief property economist Kelvin Davidson said there were similar trends for flats and townhouses.
The biggest falls, of more than 5 percent, in townhouse prices were in areas such as Otangarei in Whangarei, Taihape, Inglewood and Paihia.
But places such as Queenstown Hill, Brighton in Dunedin, central Whangarei and Huntington in Hamilton had townhouse price rises of 5 percent or more.
Davidson said people might think that values for townhouses were underperforming, particularly in Auckland where there had been a construction boom, but the data did not bear that out.
"There's a lot of them coming online but there's a lot of buyers for them, too.
"Demand is there and they are cheaper than standalone houses. We've seen a lot of first-time buyer demand out there in the market."
Chief property economist Kelvin Davidson. Photo: SUPPLIED
Davidson said the market was patchy and that fit with the overall picture of median values drifting slightly lower.
"I think it's all tracking sideways.
"Some suburbs are up, some are down… the patchiness is something we've seen throughout the year, really with interest rates down but other factors pushing the other way on house prices, things like the weak economy, weak labour market, subdued confidence, lots of listings.
"While it's difficult to generalise across the various trends at a suburb level, there is certainly some resilience among standalone houses and townhouses in lower priced areas, which will tend to have affordability on their side."
He said property values would remain sluggish for now, but conditions could be turning towards more growth in prices next year.
"Affordability in some ways has returned closer to normal so that restraint goes away to some extent. The lagged effect of lower mortgage rates will progressively pass through. We're going to see almost half of mortgages reset their interest rate in the next six months…
"It looks like the economy and labour market will be turning around to some extent in 2026 and then listings have declined as well so that rise in sales activity is starting to erode listings just a little bit.
"The things that have restrained house prices this year do seem likely to turn around next year now."
Could prices boom?
Davidson said it was unlikely that prices would boom because there was still caution in the market, and debt-to-income ratios would restrict what people could borrow.
"We're seeing a fairly flat picture for rents as well as house prices, so that suggests - not saying we've got an oversupply or that we're in absolute balance, but any shortages we might have had previously have lessened.
"You look at lending rules, you look at a degree of caution, some sort of better balance in terms of supply and demand, I think it's fairly easy to retain a cautious view of the house prices for the next 12 or 18 months."
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