Recent data from CoreLogic and insights from property experts reveal a mixed picture for both the Australian and New Zealand property markets, with significant variations in value trends across suburbs.
While parts of Australia and New Zealand have seen rising values, a growing number of suburbs are now experiencing declines as high interest rates, affordability pressures, and cautious buyer behaviour take hold.
In Australia, CoreLogic’s September Housing Chart Pack highlights that almost 30% of the 3,655 suburbs analysed saw property values drop over the three months to August 2024.
Melbourne led the decline, with 79.1% of its suburbs recording value falls. The downturn was particularly steep in affluent regions like the Mornington Peninsula, where all suburbs saw a drop in value.
“While values are still rising at the national level, albeit at a slowing pace, we’re starting to see some weakness, particularly in Victoria,” said CoreLogic Economist Kaytlin Ezzy.
Meanwhile, the property market in New Zealand shows a similar trend.
CoreLogic NZ’s Mapping the Market data reveals that while 50% of suburbs experienced “meaningful” value increases over the past year, the more recent quarterly data points to a sharper downturn.
CoreLogic NZ Chief Property Economist Kelvin Davidson noted that since June, 71% of the 951 suburbs analysed saw declines, with Auckland suburbs such as East Tamaki and Northpark witnessing drops of over 6%.
“The past 12 months is made up of two distinct phases: a period of recovery in late 2023 and early 2024, followed by a recent downturn over the past three months,” Mr Davidson said.
Ashley Church, a property expert with First National Real Estate New Zealand, attributed these fluctuations in New Zealand’s property market to changes in the Official Cash Rate (OCR) and its impact on mortgage interest rates.
“Earlier signals of potential increases in the OCR dampened market confidence, pushing the market into a slowdown,” he said, adding that recent reductions in the OCR, with expectations of further cuts, may lead to stabilisation.
‘Looking forward, the greatest challenge for the New Zealand property market is managing inflation and its stubborn resistance to staying within the Reserve Bank’s target range.
While lower mortgage rates should stimulate economic activity and gradually boost home values, there remains a risk of a ‘dead cat bounce’ where premature cuts in rates could lead to further tightening if inflation remains persistently high,” said Mr Church.
Across Australia, the downturn extended to over half of the suburbs in Hobart (54.3%), Darwin (51.2%), and Canberra (51.6%), while all Perth suburbs recorded value increases.
In contrast, the New Zealand market saw double-digit gains in only eight suburbs over the past year, including Cobden (22.6%) and Blaketown (15.9%) in Grey District, which were largely at the more affordable end of the market.
Looking ahead, both markets face further challenges. Ms Ezzy predicts that as Australia enters the spring selling season, value declines will become more common, with additional listings putting downward pressure on prices.
Similarly, Mr Davidson notes that New Zealand’s market is likely to see continued cautious buyer behaviour, leading to further softening in property values.
Mr Church, however, remains cautiously optimistic: “Provided inflation does not remain stubbornly high, a gradual recovery in consumer confidence and household spending should lead to a more stable property market over the next 12 to 18 months, though growth is expected to be modest.”
