CoreLogic NZ chief property economist Kelvin Davidson said it appeared the downturn in housing prices could be ending. Photo: RNZ / Marika Khabazi
The housing downturn may be nearing its bottom, but high mortgage rates and stretched affordability will likely stymie its return to growth, a property economist says.
New data from property research firm CoreLogic showed house prices in dozens of suburbs appeared to defy the downturn, increasing in value over the past three months.
Of the 128 suburbs that increased in value, 71 recorded an increase in median value of at least 0.5 percent.
The Kaipara District in Northland had two top-performing suburbs over the past quarter, with values up 4.7 percent in Maungaturoto and up 3.5 percent in Kaiwaka.
However, house prices in 860 suburbs nationwide declined over the past year - 729 of those suburbs saw values decrease by at least 5 percent.
Kelvin Davidson. Photo: supplied
The wider Wellington region had the softest suburbs, with falls of between 19 percent and 24 percent.
CoreLogic NZ chief property economist Kelvin Davidson said it appeared the downturn in housing prices could be ending, as mortgage rates neared their forecast peak, migration and employment levels remained high and credit rules loosened.
"The trend shows house price falls have effectively levelled out and provides further albeit tentative evidence that the downturn may be winding up, for better or worse, depending on your perspective," he said.
"I'm still expecting further falls to come and there will be no neat end to the downturn - rather, the expectation is for a relatively subdued market, as stretched affordability and tight investor regulations contain demand and limit growth."
Davidson expected more suburbs would see their house prices increase in value over the next six months, but did not anticipate a fresh boom in prices.
"Indeed, mortgage rates are still high, affordability is stretched, and debt to income ratio restrictions loom large in early 2024," he said.