Migration boosts housing market in main centres, but not a lot

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The CoreLogic House Price Index rose 0.4 percent percent in January.
Photo: RNZ / Cole Eastham-Farrelly

A property researcher says the housing market is experiencing an underwhelming uptick to start the year.

The CoreLogic House Price Index rose 0.4 percent percent in January, with a quarterly increase of 2.1 percent.

Prices are now 2.5 percent higher than September, bringing the national average to $928,184.

CoreLogic chief economist Kelvin Davidson said he expected the market to remain relatively subdued until mortgage rates came down.

The 0.4 percent increase recorded in January was a deceleration in the pace of gains on both November (0.7 percent) and December (1 percent).

Queenstown was one of the leaders, with prices now 6 percent higher than the same time last year.

“We continue to expect sales volumes and house prices to track higher in 2024,” Davidson said.

“The main centres are no doubt being boosted at the moment by extra demand from migration inflows.”

Kelvin Davidson.
Photo: SUPPLIED

Auckland prices increased 0.5 percent for the month and 2.2 percent for the quarter.

Wellington and Hamilton recorded mild growth of 0.1 percent and 0.2 percent respectively in January, while Tauranga and Dunedin saw gains of at least 0.6 percent.

“The mood in the housing market has certainly turned since the middle of last year, given a fillip by the change of government, and its property policies that are friendlier to investors. This mindset shift is reinforcing the effects of the underlying fundamental drivers, such as continued employment growth, and high migration.

“The Reserve Bank’s proposals around loan to value (LVR) and debt to income (DTI) ratio rules, if enacted, will operate in tandem, however the DTIs may not bind straightway so the net effect on the market in the near term could be positive.”

“Certainly, some buyers will already be starting to anticipate a likely easing in the LVR rules from the middle of the year, which will allow more owner-occupiers to purchase with less than a 20 percent deposit, and reduce the required deposit for investors from 35 percent to 30 percent.”

Gisborne was the strongest regional performer, with a 3 percent rise in January, while Rotorua values fell 3.3 percent for the month.