Was October the month in which house prices finally stopped falling after almost a year of steady declines?
The Real Estate Institute of New Zealand's House Price Index (HPI), which is probably the most timely and reliable measure of house price movements we have, because it is based on sales as they become unconditional and is adjusted for differences in the mix of properties sold each month, posted a 0.2% gain across the entire country in October.
That's a marginal increase to be sure and represents more of a flattening trend than an increase in prices. But it reverses the 0.7% decline of the previous month, and brought an end to the 10.9% drop that occurred over the previous 12 months.
That flattening can clearly be seen in the graph below which tracks the monthly movement in the HPI since January 2019.
However one month's figures do not make a trend.
It's too early to know whether October's figures marked the return of an upward swing in house prices, whether they just paused to catch their breath before continuing their downward run, or whether they marked the beginning of a period of price stability.
It is probably significant that the HPI increased in the country's three main centres of Auckland +0.5%, Wellington Region +0.1% and Christchurch +0.3% in October, particular as Auckland and Wellington have previously posted some of the biggest price declines.
But even in Auckland and Wellington, the movements in the HPI were not uniform.
In Auckland the HPI increased in Rodney, the Central Isthmus suburbs and Papakura in October, but declined on the North Shore, Waitakere and Manukau and was unchanged in Franklin.
In the Wellington region the HPI increased in Porirua and Wellington City and declined in Upper and Lower Hutt.
Similar variances can be seen around the rest of the country, as shown in the table below.
November's figures should be telling, because it will be the market's last full month before activity starts to wind down for the Christmas/New Year break.
Indications so far are that sales volumes will remain at low levels compared to previous years and there won't be a lot of movement either way in prices.
But one thing the market is not short of is uncertainty.
There will be more news soon on the interest rate front and it won't be supportive of higher prices.
And many people will be wondering how their household budgets will end up after taking into account rising wages compared to higher inflation. The general economic picture is nothing if not confused.
So up, down or sideways for house prices? At this stage, it's probably too close to call.
The comment stream on this article is now closed.
REINZ House Price Index - October 2022
- You can have articles like this delivered directly to your inbox via our free Property Newsletter. We send it out 3-5 times a week with all of our property-related news, including auction results, interest rate movements and market commentary and analysis. To start receiving them, register here (it's free) and when approved you can select any of our free email newsletters.
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.