While average house values have increased for four months, the market overall is down 3.3 percent since the start of 2023, with only three centres - Rotorua, Queenstown and Invercargill - recording price rises this year. Photo: 123RF
The housing market continues to improve, but recovery next year is expected to be gradual and muted.
The November Quotable Value (QV) housing market report shows the value of the average home increased 0.7 percent on October, the fourth consecutive monthly rise, for a quarterly gain of 2.3 percent.
The national average value was $914,017, a gain of $6630 on October, but overall the market was still down 3.3 percent since the start of the year.
QV operations manager James Wilson said the market this year had fallen, stabilised, and was now recovering.
"But rather than the start of another major uplift in values, I expect we'll see a return to a more typical sort of housing market in the year ahead, with slow growth, and days to sell and listing numbers eventually returning to historic norms."
He said high interest rates and issues of affordability would put a "damper" on recovery.
Values rose in 14 of the 16 main urban centres over the past quarter, with Tauranga and Marlborough posting marginal declines.
Among the stronger gains for the period were Rotorua (9.5 percent), Hastings (3.5 percent), and Wellington (3.2 percent).
Only three centres recorded price rises this year - Rotorua (3.2 percent), Queenstown (2.1 percent) and Invercargill (1.5 percent), with Whangārei and Tauranga values still markedly lower.
Wilson said first home buyers remained the driver of the improvement, and increased migration was also underpinning demand, but he doubted the recovery would be strong.
"It's really tough out there and it could get tougher. It's just a slow but steady recovery at this stage," he said.
"But it will be interesting to see if significant numbers of investors do return to the market in the first half of 2024, given the new government's policy settings. They'll be hamstrung by affordability constraints just like everyone else, as the mortgage pain looks set to continue in 2024."