Property values in Aotearoa New Zealand fell 0.4% in November, marking the ninth consecutive decline, according to CoreLogic's hedonic Home Value Index (HVI).

Values now stand at $800,795, which is 3.5% lower than a year ago, equivalent to a drop of around $29,100. They're also still 17.7% below the post-COVID peak, although 16.0% higher than the pre-COVID figure from March 2020.

CoreLogic NZ Chief Property Economist, Kelvin Davidson said that November's results indicate a market that's still in a 'holding pattern'; not falling to any significant extent, but not rising emphatically either. That's consistent with patterns in the underlying drivers some supportive, some still restrictive.

"As weve seen many times before, the ability of lower mortgage rates to kickstart housing market sentiment and sales transactions, as well as property values, shouldn't be underestimated. But it's also important to note that there are several factors pushing in the other direction at present, such as the overhang of available listings and the weak labour market."

"Although the recent downturn in property values may come to an end soon, it won't necessarily give way to a sharp or sudden upturn. The Reserve Bank itself is projecting a rise in house prices of around 7% in 2025, and I'd broadly agree with that view. If correct, it'd be a fairly modest rise given how deep the downturn since late 2021 has proven to be."

Mr Davidson notes, abundant supply still seems to be a significant restraint on property values in Auckland, both in terms of existing properties listed for sale, but also the flow of new-build stock being completed. However, first home buyers remain fairly active, and it'll be interesting to see if the emerging return of mortgaged investors leads to some upwards pressure on Auckland's values in 2025.

To some extent, the regional trends for property values seemed to flatten out in November, possibly signalling the supportive influence of lower mortgage rates. For example, Nelson rose by 0.3%, with Hastings edging up by 0.2%, and both Palmerston North and Rotorua flat. There were falls in areas such as Napier and New Plymouth, but relatively modest at 0.2%.

Some provincial markets fared relatively well in November, but that wasn't universal. Indeed, after a period of resilience, Queenstown dipped by 0.8%, with Gisborne and Whangarei both falling by 0.9%. To be fair, it's risky to read too much into a single monthly result. But those drops do nevertheless highlight once again the holding pattern the housing market currently seems to be in, with some key factors such as mortgage rates providing support, but others more challenging, Davidson noted.

Looking ahead to 2025, Mr Davidson noted underlying drivers such as lower mortgage rates and a return to modest GDP growth should see property sales volumes continue to rise. In turn, that will help to bring down the stock of listings available on the market, and contribute to a rise in property values.

CoreLogic's modelling suggests that after less than 70,000 property sales in both 2022 and 2023, the figure will end up at around 80,000 this calendar year, before rising to approximately 90,000 next year. That's still slightly below average, but will be a welcome return to more normal levels of activity for many market participants.

"In turn, the tendency for DTIs to restrain borrowers capacity to get larger loans even if they could technically afford it  is another reason for caution about how fast the housing market might rise next year."