Are housing prices in New Zealand close to the bottom?

For real estate buyers and sellers watching the property market closely, many are trying to time when to make their move. As a seller, it can be unsettling bringing your house to the market when you think prices are going to keep falling because you’re afraid buyers will make low-ball offers. And as a buyer, the last thing you want to see is the property’s value continue to hurtle downwards after you’ve bought.

So when the real estate industry says the bottom of the market has been reached, it’s a big moment for the confidence and activity of buyers and sellers.

And while we’re not quite there yet, Trade Me Q1 Property Pulse Report has some encouraging news of early signs of the market plateauing with fewer homeowners and buyers thinking house prices will fall in the next 12 months.

In our April survey of over 7000 homeowners and more than 600 buyers, the proportion of homeowners who think house prices will decrease in the next 12 months has fallen (Q1 2023 38% vs Q3 2022 40%) and the percentage of buyers who think house prices would decrease in the next 12 months also fell (Q1 2023 47% vs Q3 2022 49%). At the same time, 55% of property seekers are thinking now is a good time to buy.

“Declines in property values are slowing and as we approach the end of interest rate rises, this gives promise that buyers and sellers will both have more certainty as we head out of the winter months,” says Gavin Lloyd, Sales Director at Trade Me Property.

“House prices may drop a little bit more, however once again, I believe we are near the bottom of the market,” adds Paulette Trotter, Loan Market mortgage adviser.

CoreLogic chief property economist Kelvin Davidson describes the housing downturn as on its last legs but still not finished yet. And even if the market reaches its bottom, an immediate or strong upturn in this environment doesn’t seem likely either, he cautions.

“It’s not optimism but less pessimism,” he says. “The idea that you can see the end but we’re not quite there,” he adds.

While it may be too early to call in every city, some real estate agency firms are picking the bottom has already been reached in some key cities including Wellington and Dunedin, Auckland, Tauranga and Hamilton.

Wellington was one of the first of the big city markets to feel the house price correction in late 2021 and sales director Nicki Cruickshank at Wellington agency Tommy’s Real Estate says: “We probably think we’ve hit the bottom. We’re a bit ahead of the rest of the country and we’re finding there are a lot of people out there looking. We’re getting multiple offers on houses that we’ve not had for 18 months. Homes are selling faster,” she adds.

“It’s not shooting up at great rates but it’s steady,” says Nicki.

While buyer interest has been very focused on first home buyers in recent months, families buying their second home are playing a more active role, she adds. They’ve run out of room, and they want to buy a bigger property, she explains.

In Dunedin, meanwhile, Joe Nidd, owner of independent Dunedin brokerage Nidd Realty says the feeling there is that the bottom of falling prices has been reached.

And the stats back that up, says the agency principal. “We’ve had three months (February to April) now where the median sales price has been around $570,000,” he says. And open home numbers are up.

There’s strong activity from first home buyers and investor sentiment is changing, he notes. “There are more investors in the market which is a pretty good indicator that people are picking the bottom because, if they’re looking to buy now, they’re starting to see value even in a higher interest rate environment.”

The market is incredibly price sensitive, he warns. Buyers are intolerant of what they see as an inflated price. “People are just “watchlisting” homes on Trade Me Property and waiting until they see good value,” he says.

As for Christchurch, which hasn’t been as volatile a market as others in the country, Tall Poppy franchise owner, Debi Pratt says after some doom and gloom in January to March, inquiries are going up in her market and open home attendances are well up. About a month ago, her top sales person had six or seven listings which were attracting very little buyer activity. Then a month ago the whole lot went under contract, she says. These were homes in the $500,000 to $800,000 range, a mixture of first and second homes.